Nigeria’s new tax framework has retained exemptions on foreign dividends,
interest, rent, and royalties, maintaining a long-standing policy that allows such
income to remain tax-free when earned outside the country and remitted
through approved financial channels.
The provision, contained in Section 162 of the Nigeria Tax Act 2025, is part of
broader fiscal reforms aimed at harmonising the country’s tax system while
reducing ambiguity around cross-border income taxation at a time when Nigeria
continues to rely heavily on external inflows for foreign exchange liquidity.
The clarification effectively confirms that offshore passive income, including
earnings from foreign investments and overseas assets, will not be subject to
domestic tax once repatriated under regulated banking channels, reinforcing
continuity in Nigeria’s approach to double taxation relief.
Under previous tax rules, the exemptions had also extended more broadly to
certain categories of foreign-earned income, including service-related income,
provided it was brought into Nigeria in convertible currency through approved
banking channels.
Fiscal policy experts say the clarification is significant because it removes
ambiguity at a time when Nigeria is trying to improve tax certainty and
encourage formal inflows into the financial system.
Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy
said the framework is designed ensure that income brought into Nigeria is not
subjected double taxation, particularly where such income has already been
taxed in foreign jurisdictions. According to him, the new law strengthens
unilateral relief mechanisms for resident tax payers with cross-border exposure,
allowing foreign taxes paid to be offset against Nigerian tax obligations, subject
to documentation and compliance requirements.