What Does Nigeria’s New Tax Law Mean for Remote Workers?
The way young Nigerians earn money is changing fast. Thanks to the rapid growth of online work, hundreds of thousands now work primarily online for foreign clients. In the past, reporting tax for people in this category used to be a chore. Until recently, taxes on foreign income were unclear or summarily ignored. The new tax law just changed all that.
On June 26, 2025, President Bola Tinubu signed four major Tax Reform Acts into law: the Nigeria Tax Act, Tax Administration Act, Nigeria Revenue Service (NRS) Act, and Joint Revenue Board Act. Together, these replace the outdated FIRS-based system and take effect on January 1, 2026 .
If you're a freelancer on Upwork, a remote worker for a global company, or run an online business, these new rules affect you. In this blog post, we will help you understand how the new tax law affects you so you can be informed and thrive in the new dispensation.
💡 Understanding the Four Pillars of Reform
The new tax framework rests on four interconnected pieces of legislation that work together to create a more unified, efficient, and enforceable system. Think of these as the building blocks of a completely reconstructed tax architecture.
The Nigeria Tax Act merges over 50 different tax laws into one code, making it easier to understand and comply with. This consolidation eliminates the confusion that previously existed when multiple tax laws seemed to contradict each other or created overlapping obligations.
The Tax Administration Act standardises how taxes are collected across federal, state, and local governments, ending the previous system where different jurisdictions had vastly different procedures and requirements.
The Nigeria Revenue Service (NRS) Act replaces FIRS with a more independent, digital-first body focused on efficiency and transparency. This new agency is designed to be more responsive and technologically advanced than its predecessor.
Finally, the Joint Revenue Board Act establishes coordination between tax authorities and introduces new tools for dispute resolution, including a Tax Appeal Tribunal and Tax Ombudsman. This means if you have a disagreement with the tax authorities, there are now formal channels for resolution.
🛑 No More "Grey Areas"
The new tax reforms remove the confusion around foreign income. In the past, many Nigerian freelancers and remote workers didn’t report earnings from platforms like Payoneer, Wise, or PayPal due to unclear rules.
Now, it’s clear: if you live in Nigeria and earn money from abroad, you must register with your state tax authority, declare your income in naira, and pay taxes—just like local earners.
The law also redefines who qualifies as a resident. If Nigeria is your main home or your family and finances are based here, you’re considered a resident and must pay tax on all your income, no matter where it comes from.
🫵🏽 Who Needs to Take Action?
The reforms target a wide range of digital workers in Nigeria: freelancers on platforms like Upwork or Fiverr, remote employees for foreign companies, and online business owners earning from abroad.
Even students with side gigs like tutoring, coding, or freelancing, are included. If you're earning money for services, it now counts as taxable income.
Simply put: if you're getting paid, you’re expected to register with the tax authorities in your state of residence and get a Tax Identification Number (TIN); whether you're a software developer, barber, or makeup artist.
📋 Your New Obligations: A Step-by-Step Guide
Understanding your obligations under the new system requires breaking down the process into manageable steps. Think of this as a roadmap that every remote worker and income earner needs to follow.
Registration Requirements: The first step is registration with your state tax authority. This isn't optional, it's a fundamental requirement for anyone earning income, regardless of the source. You'll need to obtain a Tax Identification Number, which will serve as your unique identifier in the tax system.
Income Declaration Process: You must declare your foreign earnings in naira using the official Central Bank of Nigeria (CBN) exchange rate. This is crucial because your tax liability is calculated based on the naira equivalent of your foreign earnings, not the original currency amount.
Tax Payment Structure: You must pay personal income tax based on your total earnings. The government has introduced a progressive tax system with several beneficial features for individual earners.
The New Tax Rates: Understanding Your Liability
One key change in the new tax system is a more flexible, income-based tax structure. The first ₦800,000 you earn each year is now tax-free, which is great news for students, part-timers, and entry-level workers.
If you earn more than that, only the amount above ₦800,000 is taxed, using progressive rates ranging from 15% to 25%, depending on how much you earn. For example, someone making ₦3 million a year would pay just ₦330,000 in taxes; about 11% of their income.
This new structure reduces the tax burden for most low- and middle-income earners.
Enforcement and Compliance Mechanisms
The new system isn’t just about new rules—it’s about better enforcement. The Nigeria Revenue Service (formerly FIRS) is working with state authorities to digitize tax collection, using tools like data analytics, location tracking, and global tax treaties.
With BVNs linked to bank accounts and income reports from foreign employers or platforms, your foreign earnings are now visible. Accounts like Payoneer, Wise, or Barter connected to your Nigerian details can no longer fly under the radar.
Non-compliance comes with penalties. If you don’t get a TIN or fail to file returns, you could face fines—even if you’re just running a small side hustle.
Practical Steps for Preparation
The new tax rules are set to begin on January 1, 2026, so now is the time to prepare. Here’s what to do:
Track Your Income: Keep clear records of all your earnings, from freelancing platforms, direct clients, or other foreign sources. Monitor your balances across currencies (USD, GBP, EUR, NGN) and save details like transaction history and CBN exchange rates used for conversions.
Understand Your Taxable Income: Since your taxes will be based on your income in naira, stay updated on exchange rate changes and how they affect your total earnings.
Plan Ahead: Start setting aside 15–25% of your income for taxes, even if you’re not paying yet. This helps you avoid surprises later.
Get Expert Help: Talk to a certified tax professional before 2026 to understand your obligations and stay compliant.
How Cenoa helps you keep more of what you earn
Cenoa helps remote workers keep more of their money by offering a USD account that makes it easier to receive payments from international clients. Unlike traditional banks or platforms that charge high fees and offer poor exchange rates, Cenoa lets users store earnings in dollars and convert only when rates are favourable.
With Cenoa, remote workers can also avoid unnecessary currency losses by spending directly from their USD account using virtual cards or sending money directly to local bank accounts at the best rates. This means more control, better savings, and less money lost to fees or bad rates, so you keep more of what you earn.
Conclusion: Embracing the New Reality
Nigeria’s new tax reforms demand greater transparency from anyone earning online or from abroad—from WhatsApp vendors to remote freelancers. It’s not about fear, but readiness.
Track your income, understand your tax duties, and plan ahead. The reforms take effect January 1, 2026—giving you time to prepare for a more digital and transparent future of work.
