Nigeria’s evolving tax framework has opened a new discussion over how employment income should be treated when a worker lives outside the country but remains employed by a Nigerian company.
The issue has become increasingly relevant as remote work expands across borders, allowing Nigerian businesses to hire professionals who perform their duties from countries such as the United Kingdom, United States, Canada and other jurisdictions.
At the centre of the debate is the Nigeria Tax Act, 2025, which introduced a new framework for taxation beginning January 1, 2026. The law has changed several aspects of Nigeria’s tax administration, including how income connected to Nigerian residents and non-residents is assessed.
Tax experts say questions remain over how some provisions should apply to non-resident Nigerians or foreign residents who work remotely for Nigerian companies, particularly where employment duties are performed entirely outside Nigeria.
The uncertainty focuses mainly on the interaction between employment income rules under Section 13 and provisions dealing with non-resident persons under Section 17 of the Nigeria Tax Act.
Under Section 13 of the Nigeria Tax Act, employment income is considered derived from Nigeria where the employee is a Nigerian resident.
The law also provides that employment income may be regarded as derived from Nigeria where employment duties are wholly or partly performed in Nigeria and certain conditions relating to the employer and taxation in another jurisdiction apply.
This means the location of the employer alone does not determine tax treatment.
A Nigerian company employing someone who lives permanently abroad may therefore need to examine several factors, including the employee’s tax residency, where duties are performed and whether the income is already taxable in another country.
Traditionally, employment relationships were easier to classify because workers usually performed their duties in the same country where their employers operated.
Remote work has changed that structure.
A Nigerian company may now employ a software engineer based in London, a consultant living in Toronto or a digital specialist residing in another country while the employment contract remains with a Nigerian entity.
The question then becomes whether the income has sufficient connection with Nigeria to trigger Nigerian tax obligations.
Tax professionals say these situations require careful examination because the answer may differ depending on individual circumstances.
Section 13 exemptions create additional considerations
The Nigeria Tax Act provides some exemptions for certain non-resident employees.
Under Section 13(2), employment income of a non-resident employee may not be taxed in Nigeria where the employer is a start-up or engaged in technology-driven services or creative arts, and the income is taxable in the employee’s country of tax residence.
This provision introduces a more specific approach for some categories of remote employment.
However, experts note that determining eligibility requires analysis of the facts involved, including the nature of the employer’s business and the employee’s tax position abroad.
The issue is important for Nigerian businesses that increasingly rely on international talent.
Companies employing workers outside Nigeria may need to determine whether they have obligations relating to payroll deductions, reporting and compliance.
Failure to correctly assess tax responsibilities could create future disputes involving employers, employees and tax authorities.
For businesses, the challenge is ensuring that employment arrangements comply with both Nigerian requirements and the laws of the country where the employee resides.
Another major consideration is the possibility of taxation by more than one country.
A worker living abroad may already have tax obligations in their country of residence while also maintaining employment ties with Nigeria.
Nigeria has double taxation agreements with some countries, designed to reduce situations where the same income is taxed twice.
However, eligibility for relief depends on treaty provisions and the taxpayer’s circumstances.
Experts advise affected individuals to maintain proper records, including employment contracts, proof of residence, tax filings and evidence of taxes paid in other jurisdictions.
Tax practitioners say clearer guidance from the Nigeria Revenue Service may become necessary as more companies adopt cross-border remote employment models.
They argue that practical interpretation will help businesses and workers understand when Nigerian tax applies and when exemptions may be available.
The broader issue reflects a global challenge: tax systems designed around physical workplaces are adapting to an economy where employment can increasingly take place across borders.
Nigeria’s tax reforms aim to modernise administration and improve clarity, but remote employment presents new questions that may require further regulations, guidance or judicial interpretation.
For Nigerians working abroad for local companies, and Nigerian businesses hiring international remote workers, the key issue is no longer simply where an employer is located.
It is how residency, place of work, income source and applicable exemptions interact under the country’s new tax framework.