If you live in Nigeria, the money foreign clients pay you is taxable here. It makes no difference that the client is in London or that the payment came through Upwork or Fiverr.
It doesn’t matter either if the dollars are still sitting in your Payoneer account. Under the Nigeria Tax Act 2025, a resident’s income is taxed in Nigeria wherever it arises and whether or not it’s brought home.
The good part: you’re taxed on profit after business costs, the first ₦800,000 is at 0%, and exported work is zero-rated for VAT. Here’s how it works for freelancers, developers, designers and writers.
Are you a Nigerian tax resident?
Most freelancers reading this are. The Act treats you as resident for a year if any one of these applies:
- you’re domiciled in Nigeria
- you have a permanent home available for your use here
- Nigeria is your habitual place of abode
- you have substantial economic and immediate family ties here
- you spend 183 days or more in Nigeria in a 12-month period
Working remotely from Lagos, Abuja or Enugu for clients abroad ticks several of these at once.
The foreign income exemption doesn’t cover your fees
Many freelancers have heard that foreign income is tax-free if it comes in through official channels. The Act does exempt foreign income brought into Nigeria through approved channels, but only four types: dividends, interest, rent and royalties. Fees for services you perform aren’t on the list, so payment for coding, design, writing or virtual assistance stays taxable.
If a foreign country has already taxed some of that income, Nigeria gives relief, so you can credit tax paid abroad against the Nigerian tax on the same income. Keep proof of anything withheld overseas.
How your tax is worked out
As a freelancer you’re running a business, even without a registered company. Your profit is your total fees minus expenses incurred wholly and exclusively to earn them. Then personal deductions come off, and the result is taxed in bands:
| Taxable income | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 (up to ₦3m) | 15% |
| Next ₦9,000,000 (up to ₦12m) | 18% |
| Next ₦13,000,000 (up to ₦25m) | 21% |
| Next ₦25,000,000 (up to ₦50m) | 23% |
| Above ₦50,000,000 | 25% |
Typical business expenses for freelancers include platform service fees, internet and data, software subscriptions, a co-working desk, and repairs to the equipment you work with. Personal spending isn’t deductible. A new laptop is capital spending, so instead of deducting the whole price in one year you claim capital allowances on it over time.
Personal deductions include pension contributions under the Pension Reform Act, NHF and health insurance contributions, life insurance premiums and rent relief of 20% of the rent you pay on your home, capped at ₦500,000.
A worked example
Example only, with a made-up exchange rate. A developer earns $12,000 in the year from Upwork and direct clients. At ₦1,450/$ that’s ₦17,400,000.
- Business expenses (platform fees, internet, software, co-working): ₦1,400,000. Profit: ₦16,000,000.
- Rent on their flat is ₦1,500,000, so rent relief is 20% of that: ₦300,000.
- Taxable income: ₦15,700,000.
- First ₦800,000 at 0%: ₦0
- Next ₦2,200,000 at 15%: ₦330,000
- Next ₦9,000,000 at 18%: ₦1,620,000
- Last ₦3,700,000 at 21%: ₦777,000
- Total for the year: ₦2,727,000
That works out to about 17% of the taxable income. Run your own figures on the personal income tax calculator. For how the bands stack, see how tax is calculated in Nigeria.
Report your income in naira. Keep a note of the date and naira value of each payment, and the rate you used, so you can explain your figures. If you’re unsure which exchange rate your state tax office expects, ask them before you file.
VAT on work for foreign clients
Services supplied to a non-resident person outside Nigeria count as exported services, and the Act charges VAT on them at 0%. A service to the Nigerian branch of a foreign company doesn’t count. Separately, small businesses are exempt from registering for and charging VAT. If you also sell to Nigerian clients and your turnover grows, read what VAT is and who pays it.
When the client is Nigerian
A Nigerian company that pays you for professional or consultancy work may deduct withholding tax, commonly 5% for a resident individual, and send you a receipt. Keep those receipts. The amount is credited against your yearly bill. It helps to know who pays withholding tax and when.
Getting paid and keeping records
Platform statements make your life easier at filing time, so download them yearly. To compare the ways to get the money home, see receiving Upwork payments and withdrawing from Fiverr.
If clients pay you in USDT, the fee is income when you receive it. When you later sell the USDT for naira on Snapiro, the sale shows under Activity with the rate used, and you get an email for each one, which gives you a clean record. Selling the USDT is a disposal too, though gains on a dollar stablecoin are usually small. More on that in crypto tax in Nigeria.
Filing your return
Freelancers pay personal income tax to the internal revenue service of the state where they live, not to the Nigeria Revenue Service. You file a self-assessment return each year, normally by 31 March, covering the previous year’s income, with a statement of accounts you attest to yourself. You’ll need a tax identification number first.
Missing the return attracts a penalty of ₦100,000 for the first month and ₦50,000 for each month after, under the Nigeria Tax Administration Act 2025. The steps are in how to file tax returns in Nigeria.
Freelancer tax questions
Should I register a company to pay 0%?
Maybe, but check first. Small companies pay 0% company income tax, but professional services businesses are excluded at any size, and salary you pay yourself is still taxed. How the new law treats small businesses explains the tests.
My dollars are still in Payoneer. Is that income yet?
Yes. A resident is taxed whether or not the income has been brought into Nigeria.
I also have a salaried job. What changes?
Your employer’s PAYE covers only the salary. Your freelance profit is added on top, often in a higher band, and you declare both on your yearly return.
General information, not personal advice. If clients pay in USDT, the rate calculator shows today’s naira value.
