Tax Law: Are You Supposed To Pay?.

TAX LAW: WHO IS TO PAY, HOW TO PAY AND EFFECT.

In Nigeria, personal income tax eligibility is governed by the Personal Income Tax Act (PITA) and administered by both Federal and State Revenue Services. Here's a clear breakdown:

Who Must Pay Personal Income Tax (PIT)?

1. Residents

Individuals living in Nigeria for 183+ days per year are classified as tax residents. They are taxed on their worldwide income  .

2. Non-residents & Expatriates

Taxed only on income earned or sourced within Nigeria—for instance, consultancy or technical services performed in Nigeria  .

A special provision called Significant Economic Presence (SEP) may tax non-residents rendering professional services even without physical presence  .

3. Employees and Self-employed Individuals

Employees: Tax is deducted at source via PAYE by employers  .

Self-employed/business owners/partners/trustees: Must file and pay through direct assessment to SIRS or FIRS  .

4. Executors, Trustees, Partnerships, and Informal Entities: Entities earning income (partners in a partnership, trustees, estate executors) are liable for PIT  .

Individuals earning at or below the national minimum wage (₦30,000 until April 2024, now ₦70,000/month) are exempt from PIT  .

Starting January 2026, households making ₦250,000 or less/month (~₦3M/year) will also be classified as poor and exempt  .

The reformed tax laws may exempt those earning up to ₦800,000–₦1,000,000/year from PIT  .

Regardless of exemptions, all liable taxpayers must pay a minimum tax of 1% of gross income (if computed tax is lower)  .

Person / Entity Taxable? Rate & Notes

Nigerian resident (183+ days) Yes Worldwide income taxed

Non-resident earning in Nigeria Yes Only on Nigerian-sourced income

Employee earning above minimum wage Yes PAYE deducted via employer

Self-employed/business owner Yes Direct assessment required

Trustees, executors, partners Yes Tax via SIRS/FIRS

Below minimum wage / low-income group No Fully exempt. All taxable persons Yes Subject to minimum tax of 1%

Personal Income Tax Rates (2025)

The progressive annual brackets are:

₦ 300,000 at 7%

Next ₦ 300,000 at 11%

Next ₦ 500,000 at 15%

Next ₦ 500,000 at 19%

Next ₦ 1,600,000 at 21%

Above ₦ 3,200,000 at 24%  

Additionally, a Consolidated Relief Allowance (whichever is higher: ₦200K or 1% + 20% of gross income) reduces taxable income.

State Internal Revenue Service (SIRS): For residents, employees, self-employed, local trusts/partnerships  .

Federal Inland Revenue Service (FIRS): For non-residents, federal workers (military, police, foreign service), trustees, estates  .

Eligible?

You need to pay PIT if you:

1. Live or work in Nigeria and earn above exemption limits, or

2. Perform work in Nigeria as a non-resident or render services remotely qualifying under SEP, or

3. Operate a business, partnership, trust, or are an executor of income‑earning estate.

A Publication Of The Truerepoerter.