How new tax law treats non-resident citizens working for Nigerian-resident employers

THE Nigeria Tax Act, 2025 (NTA) has triggered a fresh legal debate over the tax obligations of non-resident individuals working remotely for Nigerian companies, with tax experts warning that an apparent conflict between two provisions could leave affected workers and employers uncertain about their liabilities.

The controversy centres on Sections 13 and 17 of the new law, which appear to provide different treatments for employment income earned by non-resident individuals (NRIs) working for Nigerian-resident employers.

The issue, according to an explanatory note shared by experts at Thelawcrest, has become increasingly important as technology and remote work have enabled employees to perform their duties from countries outside Nigeria while maintaining employment relationships with Nigerian companies.

Section 13(1)(b) of the NTA provides that employment income is deemed to be derived from Nigeria, and therefore taxable, where the duties of employment are wholly or partly performed in Nigeria and the remuneration is paid by, or on behalf of, a Nigerian-resident employer.

On the face of it, the provision could expose a non-resident employee of a Nigerian company to personal income tax where part or all of the employment duties are performed in Nigeria.

However, Section 17(3)(b)(i) appears to provide a different treatment by excluding payments to non-resident individuals under contracts of employment where they provide services to Nigerian employers from outside Nigeria.

This apparent inconsistency has raised questions over whether a worker who lives abroad and performs all employment duties remotely for a Nigerian company should be subject to Nigerian personal income tax.

One possible interpretation is that Section 13 applies where employment duties are performed physically in Nigeria, while Section 17 deals specifically with non-resident employees who perform their duties outside Nigeria.

Under that interpretation, an NRI living in the United Kingdom, United States, Canada or another country and working remotely for a Nigerian employer could potentially be exempt from Nigerian income tax on the employment income.

However, the NTA does not expressly qualify the phrase “wholly or partly performed in Nigeria” with the word “physically”. This could give the tax authorities room to argue for a broader interpretation of the provision.

Tax practitioners say the issue could become a significant source of disputes between taxpayers, employers and the Nigeria Revenue Service unless administrative guidelines or judicial decisions provide clarity.

The debate also raises questions about established principles of tax interpretation. Under the literal rule, taxing statutes are generally interpreted according to the words used by the legislature.

The principle was illustrated in Cape Brandy Syndicate v IRC, where the court held that nothing should be read into a taxing statute beyond what is clearly stated. Similarly, Coltness Iron Company v Black supports the position that a taxpayer should not be subjected to a tax burden unless the law clearly establishes an intention to impose it.

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Another principle relevant to the debate is contra fiscum, broadly meaning that where a tax provision is genuinely ambiguous, an interpretation imposing the lesser burden on the taxpayer may be preferred.

The NTA represents a departure from the previous regime under the repealed Personal Income Tax Act, where employment income from duties wholly or partly performed in Nigeria was generally treated as taxable in Nigeria.

The new law appears to adopt a more nuanced approach to cross-border employment and remote services. Section 13(2), for instance, provides exemptions for certain non-resident individuals employed by start-ups and businesses involved in technology-driven services or creative arts.

For Nigerian companies, the uncertainty could have practical consequences, particularly for businesses employing workers who operate permanently from abroad. Employers may have to determine whether they are required to deduct and remit Nigerian personal income tax from the salaries of such workers.

For affected employees, the interpretation could also determine whether their Nigerian employment income is taxable in Nigeria in addition to tax obligations in their countries of residence.

Experts therefore say the NTA’s objective of modernising Nigeria’s tax framework must be matched by clear administrative guidance.

Until the Nigeria Revenue Service or the courts clarify whether “performed in Nigeria” under Section 13 refers strictly to physical presence or can extend to remote employment performed outside Nigeria, non-resident remote workers and their Nigerian employers could remain in a legal grey area.