Foreign companies employing Nigerians to work remotely will no longer be deemed taxable in the country solely because of those remote roles, following clarifications under Nigeria’s ongoing tax reform programme. The clarification was disclosed by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, during a virtual tax reform implementation engagement with human resources and payroll professionals, chief financial officers, and tax managers, organised in collaboration with the Joint Revenue Board.

Oyedele said the reform aims to make Nigeria more competitive in the global labour market while removing uncertainties that have discouraged foreign firms from hiring Nigerian talent. According to him, the presence of remote workers in Nigeria, without additional factors, does not create a taxable presence for foreign employers.

“Foreign employers are no longer deemed taxable in Nigeria solely because they have employees working remotely in the country,” Oyedele stated via his verified X, formerly Twitter, handle.

He explained that the clarification aligns Nigeria’s tax framework with global best practices on remote work, economic substance and permanent establishment, while still protecting the country’s fiscal interests.

The engagement session, which attracted nearly 15,000 registered participants, focused on the practical implementation of the recently enacted Tax Reform Acts and their implications for employers and employees.

Oyedele highlighted several worker-friendly provisions under the new tax laws, noting that low-income earners are among the biggest beneficiaries. He said the reforms were designed to reduce the tax burden on vulnerable workers.

Under the reforms, individuals earning the national minimum wage or less are automatically exempt from personal income tax. Employees earning up to ₦100,000 per month may also see their tax liability reduced to zero once allowable deductions are applied, including pension contributions and rent relief.

He clarified that despite the broader restructuring of Nigeria’s tax architecture, personal income tax remains payable to the relevant State Internal Revenue Services.

“To preserve fiscal federalism, all revenue agencies will work together under the Joint Revenue Board to ensure a harmonised and seamless experience for taxpayers,” Oyedele said.

On partnership income, he noted that taxes are payable to each partner’s state of residence, reinforcing the residence-based principle in personal taxation.

To ensure workers benefit from the reforms, payroll managers were advised to apply the new Pay-As-You-Earn computation process correctly. The process begins with gross income, after which benefits-in-kind are added where applicable. Statutory reliefs for pension, NHIS and NHF contributions are then granted.

Oyedele added that workers are entitled to rent relief of 20 percent of actual rent paid, capped at ₦500,000. He further explained that the first ₦800,000 of taxable income is exempt and taxed at zero per cent.

While the top marginal personal income tax rate remains 25 per cent, Oyedele said the effective tax rate for most workers would be lower due to the expanded reliefs.

The session reiterated compliance timelines. Employers must file annual PAYE returns by January 31 each year, detailing employees’ emoluments and deductions. Individual self-assessment returns must be filed by all taxable persons by March 31, covering all income sources.

In addition, a new tax incentives return has been introduced for individuals and entities benefiting from specific tax incentives, aimed at improving transparency and accountability.

Stakeholders said the clarification on remote work taxation and broader worker-focused reforms could attract foreign investment, expand employment opportunities for Nigerians, and strengthen confidence in the evolving tax system across public and private sector employers nationwide.