In a landmark move to end decades of confusion, Nigeria has published definitive new rules that clearly establish who qualifies as a tax resident in the country. The updated legislation, which came into effect on January 1, 2026, provides individuals with a straightforward framework to determine their tax obligations, removing longstanding ambiguity.
Who is Now Considered a Tax Resident in Nigeria?
According to the freshly enacted guidelines reported by financial platform Cowrywise, an individual will be deemed a tax resident in Nigeria for a given tax year if they meet any one of the following conditions:
• They are legally domiciled in Nigeria.
• They maintain a permanent home within the country for domestic use.
• They are physically present in Nigeria for 183 days or more within a tax year. This count includes periods of short leave or temporary absence.
• They have substantial economic interests or immediate family ties based in Nigeria.
• They are serving as a Nigerian diplomat or public official stationed abroad.
Tax experts highlight that these criteria are designed to capture not just physical presence but also an individual's core personal and economic connections to Nigeria. This ensures a more holistic assessment of residency status.
Why Your Residency Status Drastically Affects Your Tax Bill
The distinction between resident and non-resident is critical, as it dictates the scope of income subject to Nigerian taxation. The law stipulates that individuals classified as tax residents are liable to pay tax on their worldwide income. This means earnings from foreign investments, overseas businesses, and international employment must be declared.
However, provisions exist under various double-taxation treaties that Nigeria has with other nations. These agreements are intended to prevent the same income from being taxed twice, offering relief for residents with international earnings.
Conversely, non-residents are only taxed on income that originates from within Nigeria. This includes salaries from Nigerian employment, rental income from properties located in the country, dividends from local companies, and any other revenue generated from Nigerian sources.
Clarity for Nigerians at Home and Abroad
This newfound clarity is particularly significant for the vast diaspora and Nigerians with global business interests. For years, many struggled to interpret vague rules and determine their exact tax liabilities to the Federal Inland Revenue Service (FIRS).
As Cowrywise summarized, the law now provides a simple checklist: “You’re considered a tax resident in Nigeria if any of the conditions apply. The new tax law clearly defines who counts as a resident individual, removing decades of ambiguity.”
This reform, championed by the administration of President Bola Tinubu, marks a pivotal step in modernizing Nigeria's tax system. By explicitly defining residency, the government aims to enhance voluntary compliance, reduce administrative disputes, and create a fairer framework. For every individual, the message is unambiguous: determining your residency status is the essential first step in understanding your tax duties in Nigeria.
