The Presidential Fiscal Policy and Tax Reforms Committee has released detailed clarifications to address concerns raised by Nigerians in the diaspora over the new tax reforms scheduled to take effect from 2026.
Naija News reports that the clarification was contained in a document signed by the Chairman of the committee, Taiwo Oyedele, and made available to newsmen on Thursday, October 30, 2025.
Remittances, Gifts Not Taxable
According to the committee, family remittances, gifts, refunds, and community savings contributions do not fall under taxable income.
“Genuine personal transfers such as family remittances, gifts, refunds (e.g., flight tickets), or community savings contributions are not treated as taxable income,” the document clearly stated.
Only income that qualifies as earnings, such as wages, business profits, and investment returns, will be subject to taxation, and individuals are required to self-report such income.
No Double Taxation on Foreign Earnings
Addressing widespread concerns about double taxation, the committee clarified that Nigerians abroad who are not tax-resident in Nigeria will not be taxed on their foreign employment or business income.
“Income earned abroad and brought into Nigeria by a non-resident individual is now specifically exempted from tax in Nigeria regardless of whether tax was paid abroad or not,” the statement obtained by The PUNCH explained.
It added that Nigeria’s Double Taxation Agreements (DTAs) with several countries would continue to shield Nigerians abroad from being taxed twice, while a unilateral relief has been provided where DTAs are absent.
The document explained that tax residency will be determined based on the “183-day rule.”
“Residency is based on the 183-day rule (cumulative days of physical presence in Nigeria within a 12-month period). Non-residents are taxed only on income derived from Nigeria (e.g., rental income, dividends, business profits),” the committee said.
Dual citizenship, it clarified, has no impact on an individual’s tax status.
How Diaspora Investments Are Taxed
On investments, the committee noted that diaspora investments in Nigeria will either be exempted, subject to capital gains tax (CGT), or withholding tax as final tax.
Exemptions: Government bonds, including Sukuk, are tax-free.
Capital Gains Tax: Applies to sale of real estate (excluding owner-occupied homes). Shares are exempt up to proceeds of ₦150m and ₦10m gains in a year.
Withholding Tax: Dividends, non-government bond interest, and rental income attract 10% final tax, reduced to 7.5% for residents of certain countries such as the UK, South Africa, and China.
Remote Work and Pensions
Clarifying issues around remote work and pensions, the committee stated that: “Only income that arises in Nigeria is taxable for non-residents. Pensions and stipends from abroad are not taxed in Nigeria unless received for work done in Nigeria.”
“Remote workers are taxed based on the rules in the country where they are resident or earn such income, not merely where payment is made.”
The committee explained that diaspora Nigerians without Nigerian-source income have no obligation to obtain a Tax Identification Number (TIN) or file annual tax returns.
“A TIN is not required and there is no requirement to file tax returns unless you earn employment or business income from Nigeria,” it clarified.
Those with taxable business or employment income in Nigeria, however, must file returns. Platforms such as TaxProMax and online TIN registration have been introduced to ease compliance.
The reforms also provide clarity for diaspora-owned entities:
NGOs: Tax-exempt if registered strictly for charitable purposes and compliant with reporting requirements.
Diaspora-Owned SMEs: Treated like local businesses—taxed on profits but eligible for incentives, including SME corporate tax relief.
Transparency and Incentives
The committee said the reforms come with stronger transparency measures to ensure tax revenues are tied to visible infrastructure and public services, with safeguards against corruption.
On incentives, it noted that diaspora-led investments in priority sectors such as agriculture, manufacturing, and the creative industry are eligible for specific reliefs. Other incentives include VAT exemption on real estate and SME tax exemptions.
The committee stressed that the reforms were designed to be “fairer and more diaspora-friendly.” Nigerians abroad who are not tax-resident will not pay taxes on their foreign income, remittances, pensions, or remote work earnings unless they arise from Nigeria.
However, Nigerians in the diaspora with business, rental, or investment income in Nigeria will continue to be taxed in line with existing laws, with reliefs and exemptions available depending on the nature of the income.
According to Oyedele, the reforms “address incidence of double taxation, align Nigeria with global best practices, simplify compliance, and provide clarity on where tax is payable or filing obligation arises.”