Nigeria began implementing a new tax framework on January 1, 2026, with authorities clarifying who is legally required to pay tax under the reformed system. The Federal Government said the law offers clearer guidance for individuals, businesses and asset owners, while correcting the misconception that taxation applies only to large corporations or wealthy Nigerians.
According to Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, tax obligations are determined by income generation and profit rather than social status or business size, as officials push for improved compliance and reduced penalties.
Seven categories of persons required to pay tax in Nigeria
1. Salary earners (employees)
Individuals earning regular income from public or private sector employment are required to pay personal income tax, typically deducted through the Pay As You Earn (PAYE) system.
2. Self-employed individuals and freelancers
Persons who earn income independently must file tax returns themselves with their State Internal Revenue Service, covering trades, services, and informal businesses.
3. Registered businesses and companies
Companies registered in Nigeria are required to file annual tax returns and pay company income tax on profits earned from their operations.
4. Foreign companies earning income in Nigeria
Non-Nigerian firms that operate in Nigeria or derive income from Nigerian sources must pay tax on profits attributable to those activities.
5. Asset owners earning capital gains
Individuals who make profits from selling assets are required to pay capital gains tax on gains realised from such transactions.
6. Petroleum and oil-related companies
Upstream oil and gas companies are taxed under special regimes, including petroleum profits tax, due to the scale and structure of the industry.
7. Residents working for foreign employers
Nigerians living in the country but earning income from foreign employers, including remote workers, are required to pay tax based on residency and income source.
Those not required to pay:
- Children with no income
- Unemployed persons with no earnings
- Individuals who earn no income or profit
- Minors, unless they legally operate a business