Understanding the Impact of Nigeria’s New Tax Law on Diaspora Citizens, Stocks, and Real Estate
The Nigerian government’s new tax law,
scheduled for implementation in 2026, has stirred significant debate among
citizens, especially those living abroad, as well as investors in stocks and
real estate.
The law, part of a broader fiscal reform agenda, aims to modernize Nigeria’s tax system, improve compliance, and align with global best practices.
However, concerns have arisen regarding its
implications for Nigerians in the diaspora and those with financial interests
in the country’s capital markets and property sector.
For Nigerians abroad, the most pressing
concern has been whether they would be taxed on personal remittances or income
earned outside Nigeria. The Chairman of the Presidential Committee on Fiscal
Policy and Tax Reforms, Taiwo Oyedele, has clarified that the law does not
impose taxes on personal transfers such as gifts, family remittances, refunds,
or community savings.
These are not considered taxable income. Only
income that qualifies as earnings, such as wages, business profits, or
investment returns, is subject to taxation.
Furthermore, income earned abroad and brought
into Nigeria by non-residents is explicitly exempt from Nigerian tax, even if
it was not taxed in the country of origin. This exemption is especially
relevant for Nigerians living in countries without personal income tax regimes.
Residency status plays a crucial role in
determining tax obligations. The law adheres to the 183-day rule, meaning
individuals who spend fewer than 183 days in Nigeria within a 12-month period
are considered non-residents.
Non-residents are only taxed on income
sourced from Nigeria, such as rental income, dividends, or business profits
generated within the country. Dual citizenship does not alter this tax status.
Therefore, diaspora Nigerians who are not tax
residents in Nigeria are not liable for taxes on their foreign employment or
business income.
Regarding investments in Nigeria, the law
introduces nuanced changes to how income from stocks and real estate is
treated. Government bonds, including Sukuk, remain tax-exempt. Capital gains
tax (CGT) applies to the sale of real estate, except for owner-occupied
properties.
For
stocks, gains are exempt from CGT up to ₦150 million in proceeds or ₦10 million
in gains annually. Dividends, interest from non-government bonds, and rental
income are subject to a 10% withholding tax, which serves as a final tax.
However, this rate may be reduced to 7.5% for
residents of countries with which Nigeria has a Double Taxation Agreement
(DTA), such as the United Kingdom, South Africa, and China.
The law also addresses the taxation of remote
workers and digital nomads. Remote workers are taxed based on their country of
residence or where the income is earned, not merely where the payment is made.
For Nigerian residents, worldwide income is
taxable, but reliefs, allowances, and exemptions apply, particularly for
low-income earners.
Tax Identification Numbers (TINs) are not
mandatory for non-residents unless they earn income from Nigeria. Filing tax
returns is only required if one has taxable employment or business income
within the country.
The government has introduced simplified
digital platforms like TaxProMax to facilitate compliance.
Non-governmental organizations (NGOs) remain
tax-exempt if they operate strictly for charitable purposes and meet reporting
requirements. Diaspora-owned small and medium enterprises (SMEs) in Nigeria are
treated like local businesses and are eligible for tax incentives and reliefs,
provided they comply with the law.
To enhance transparency and accountability,
the reforms mandate public reporting, governance structures, and independent
oversight of tax revenues.
The government also aims to link tax
collection to visible infrastructure and service delivery, with safeguards
against corruption and misuse of taxpayer data.
Incentives under the new law are designed to
attract diaspora-led investments in priority sectors such as agriculture,
manufacturing, and the creative industry. These include corporate tax
exemptions for SMEs and VAT exemptions on real estate transactions.
In summary, the new tax law seeks to create a
fairer, more transparent, and globally aligned tax system. It reassures
Nigerians abroad that their personal remittances and foreign-earned income are
not subject to Nigerian tax, while also offering clarity and incentives for
those investing in the country’s financial and property markets.
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