AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A US company paying employees in Nigeria has to run Nigerian payroll: deduct PAYE under the 2026 tax bands and remit it by the 10th of the following month, pay pension contributions of at least 18% of monthly emoluments into each employee's RSA, and handle employer levies such as NSITF and ITF. Most US companies do this through a Nigerian subsidiary or an employer of record, because the deductions are owed by a registered Nigerian employer.
Hiring in Lagos or Abuja from a US company is common now. The salary is the easy part. The harder part is that once someone is your employee in Nigeria, Nigerian payroll law applies to them, whatever your US entity looks like. This guide sets out what that payroll has to do and the structures US founders use. Tax points are information, not advice; confirm your position with a Nigerian tax adviser.
First decide: employee or contractor
If the person invoices you, controls how the work is done and works for other clients, they may be a contractor, and you pay invoices rather than run payroll; see paying a Nigerian contractor from a US LLC. If you set hours, supply tools, direct the work and expect them full-time, they look like an employee and Nigerian employment and tax rules follow. Calling an employee a contractor does not change that.
What Nigerian payroll has to do each month
| Item | Rule (as at Oct 2026) | Source |
|---|---|---|
| PAYE income tax | Deducted under the Nigeria Tax Act 2025 bands; remitted on or before the 10th of the month after the salary month | PwC |
| Pension | Minimum 18% of monthly emoluments: 10% employer, 8% employee; remitted within 7 working days of paying salary | PwC; PenCom |
| NSITF (employees' compensation) | 1% of total monthly payroll, paid by the employer | NSITF |
| ITF | 1% of annual payroll for employers with 5+ staff, or fewer with ₦50m+ turnover | Mondaq |
| NHF | 2.5% of monthly income; compulsory for public sector staff, voluntary for private sector staff | PwC |
| Annual return | Return of all emoluments paid, by 31 January each year | PwC |
Each item is covered in its own guide: PAYE, pension and NHF, NSITF and ITF.
The 2026 PAYE bands
PwC's summary of the Nigeria Tax Act 2025, reviewed in May 2026, gives the annual bands as 0% on the first ₦800,000, 15% on the next ₦2.2m, 18% on the next ₦9m, 21% on the next ₦13m, 23% on the next ₦25m and 25% above ₦50m. Minimum wage earners are exempt. Employee pension contributions are deductible, and PaySpace's summary of the reform adds a rent relief of 20% of annual rent, capped at ₦500,000.
Three ways to set it up
1. A Nigerian subsidiary
You register a company with the CAC, get a tax ID, register with the state internal revenue service, a pension fund administrator and the levy bodies, and the subsidiary employs the staff. It gives you control and is usually cheapest per head once you have several staff, but it brings annual returns, audited accounts and company tax filings.
2. An employer of record
An EOR is a provider with its own Nigerian entity that employs your staff on your behalf, runs payroll and statutory remittances, and bills you monthly. It is quicker to start and suits one to a handful of staff; see employer of record in Nigeria.
3. Paying staff directly with no Nigerian entity
Some small companies simply wire salaries. That leaves no one registered to deduct and remit PAYE and pension, and leaves the employee without pension contributions or a record of tax paid. It can also raise questions about whether your activity in Nigeria creates a taxable presence. PwC's summary notes that services furnished in Nigeria through employees can create one, though employing Nigerian residents is not by itself a permanent establishment if they do not mainly serve Nigerian customers.
Budget for more than the salary
Founders who set a Nigerian salary in dollars often forget the employer's costs. Example only: an employee on ₦500,000 a month, with all of it counted as pensionable emoluments, costs the employer about ₦545,000 a month before group life cover and ITF: ₦500,000 salary, ₦40,000 employer pension (10%) and ₦5,000 NSITF (1% of payroll). ITF adds 1% of annual payroll once you reach the threshold, and group life premiums vary by insurer. PAYE and the employee's 8% pension come out of the ₦500,000, not on top of it. Settle what the offer letter means by "gross" before you send it, because Nigerian candidates often compare offers on take-home pay.
A monthly calendar
- Fix the naira payroll total a few days before payday, including employer pension and levies.
- Fund the naira account; see paying naira salaries from USD revenue.
- Pay net salaries and issue payslips.
- Remit pension to each employee's PFA within 7 working days.
- Remit PAYE to the state internal revenue service by the 10th of the following month.
- Pay NSITF monthly, and ITF yearly, and file the annual emoluments return by 31 January.
For a three-country comparison of payroll rules, see the Ledger's guide to running payroll in Nigeria, Ghana and Kenya.
Where Pryme fits
A Pryme Business Account holds USD and NGN with local details for each, Swap converts when you choose with the rate and fee shown first, and payroll pays a list of naira salaries in one batch. The Finance agent prepares the run; a person approves above a set ceiling. Pryme does not calculate or file Nigerian tax for you.
Questions people ask
Can a US company employ someone in Nigeria without a Nigerian entity?
It can contract with them, but running Nigerian payroll (PAYE, pension, levies) needs a registered Nigerian employer. US companies usually use a subsidiary or an employer of record.
When is PAYE due in Nigeria?
PwC's summary says employers remit PAYE on or before the 10th of the month after the salary month and file an annual return of emoluments by 31 January.
How much pension does an employer pay in Nigeria?
At least 10% of monthly emoluments, with the employee paying at least 8%, under the Pension Reform Act 2014.
Is NHF still compulsory for private sector staff?
PwC's summary, reviewed in May 2026, says NHF is compulsory for public sector employees and voluntary for private sector employees.
Sources
- PwC Worldwide Tax Summaries: Nigeria, individual tax administration (reviewed 29 May 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, taxes on personal income (reviewed 29 May 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, other taxes (reviewed 29 May 2026) · accessed Oct 2026
- PenCom: Frequently Asked Questions, 2023 edition · accessed Oct 2026
- NSITF: Services (Employees' Compensation Scheme) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate residence (reviewed 29 May 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.