Knowing how to handle tax for self-employed individuals in Nigeria is crucial for anyone starting a business, freelancing, consulting, or working as an expatriate. Whether you’re a Nigerian resident or an expat, proper tax compliance helps avoid penalties and provides access to government benefits.
Understanding Self-Employment and Tax Obligations in Nigeria
Self-employment means working for yourself instead of being an employee. The Nigerian law defines self-employed persons as individuals running their own business, trade, profession, or vocation, anywhere in Nigeria[^1]. Both Nigerians and expats can be self-employed if they earn income directly from their services.
Who Is Considered Self-Employed?
- Freelancers, consultants, artisans, traders
- Online business owners, private tutors, transport operators
- Expats who live and earn income in Nigeria, regardless of how income is paid
Why Tax Compliance Matters:
Failing to register and pay tax can result in heavy fines, legal trouble, and loss of reputation. Paying tax also allows you to access loans, government contracts, and social benefits.
Overview of Personal Income Tax for Self-Employed Individuals
Legal Framework
- Personal Income Tax Act (PITA): Governs personal income tax for all individuals in Nigeria.
- Federal Inland Revenue Service (FIRS): Administers tax collection for the Federal Government, including non-residents[^2].
Employees have tax (PAYE) deducted by their employers, but self-employed individuals must personally calculate and file their taxes.
Income Sources Subject to Tax
- Profits from business or trade
- Fees earned from contracts or consulting
- Rents, royalties, and dividends received
- Capital gains on asset sales (see below)
How to Register for Tax as a Self-Employed Individual
Step 1: Obtain a Tax Identification Number (TIN)
- Visit the Joint Tax Board portal: https://tin.jtb.gov.ng/
- Register online, or go to your state’s tax office with a valid ID, CAC certificate (if registered business), and address.
Step 2: Register with the FIRS Self-Service Portal
- Go to the FIRS online registration and e-filing portal
- Create an account, provide your TIN, select "Self-Employed"
- Submit required documents (identity, address, business info)
For Expats
- Immigration documents and work permits may be required.
- Expats must pay if physically present in Nigeria for 183+ days in any 12-month period.
Income Tax Rates and Minimum Income Tax for Self-Employed
Current Income Tax Rates (2025)
| Annual Taxable Income (₦) | Rate (%) |
|---|---|
| First ₦300,000 | 7 |
| Next ₦300,000 | 11 |
| Next ₦500,000 | 15 |
| Next ₦500,000 | 19 |
| Next ₦1,600,000 | 21 |
| Above ₦3,200,000 | 24 |
Minimum Income Tax:
If your annual income is too low or you declare a loss, you must pay a minimum income tax of 1% of total gross income.
Example Calculation
If Temitope, a freelance web designer, makes ₦2,000,000 in taxable profit:
- First ₦300,000 @ 7% = ₦21,000
- Next ₦300,000 @ 11% = ₦33,000
- Next ₦500,000 @ 15% = ₦75,000
- Next ₦500,000 @ 19% = ₦95,000
- Remaining ₦400,000 @ 21% = ₦84,000
- Total Tax = ₦308,000
Filing Your Tax Return: Timelines and Procedures
Deadline:
- File before 31st March every year for the previous calendar year.
What You Need:
- Annual profit/loss statement
- Receipts for business expenses
- Bank statements
- Completed self-assessment forms
How to File Electronically:
- Log into FIRS TaxProMax portal
- Follow step-by-step guide for uploading your returns and documents
- Official portal guide and demo
Penalties for Late Filing:
- ₦5,000 for every month return is overdue
Mistakes To Avoid:
- Failing to declare all income
- Not claiming eligible expenses
- Missing deadlines
Deductions, Credits, and Exemptions Available
Deductible Business Expenses:
- Rent, utilities, office supplies
- Staff salaries and pension
- Professional subscriptions, travel directly related to work
Capital Allowances:
- Depreciation on equipment, computers, vehicles
Tax Credits and Incentives:
- SME grants and startup incentives
- Special reliefs for agricultural business, ICT, and creative sector
Exemptions:
- Interest from government savings bonds
- Life insurance proceeds
- Approved charitable donations
Expats may qualify for treaty reliefs depending on their country of origin.
Understanding Other Relevant Taxes for Self-Employed Individuals
Capital Gains Tax (CGT)
- Rate: 10% on profits from sale of assets (e.g., property, shares)
- Exemptions: Personal cars, assets used for business under ₦100,000
Value Added Tax (VAT)
- Threshold: Must register if turnover exceeds ₦25m/year
- Rate: 7.5% charged on most goods/services
- FIRS VAT Registration Info
Withholding Tax (WHT)
- Contractors are paid less WHT (5% or 10% withheld, depending on service)
- Can be claimed as advance payment against annual income tax
Frequently Asked Questions for Self-Employed Tax in Nigeria
What happens if I don’t pay tax as a self-employed person?
You may be fined, sued, or banned from accessing government contracts or loans.
How does tax work for expats who are self-employed in Nigeria?
Expats must pay tax on Nigerian-sourced income unless protected by a tax treaty. Physical presence for over 183 days triggers tax residency.
Can I file jointly with a spouse as a self-employed person?
No. In Nigeria, spouses must file individually; there’s no joint return option.
What Nigerian tax treaties should expats be aware of?
Nigeria has treaties with countries like the UK, South Africa, France, and China, which can reduce double taxation.[^3]
How can I get professional support?
Contact FIRS (https://www.firs.gov.ng/), your state IRS, or speak with a licensed tax consultant.
Useful Resources and Links
- FIRS Personal Income Tax Information
- FIRS Self-Assessment & TaxProMax Portal
- TIN Registration Portal
- 2025 Budget Law and Tax Updates PDF
- Sample Tax Calculator (Excel)
- Expatriate Tax in Nigeria Guide
Interested in SME grants, VAT registration, or need advice about business setup? Check out our guides for SME incentives, VAT for self-employed, Expatriate taxes, and Business incorporation in Nigeria.
Stay compliant, keep good records, and if in doubt, consult a tax expert or the FIRS directly for help.
Sources:
[^1]: Personal Income Tax Act (PITA) — Lawpadi
[^2]: Federal Inland Revenue Service (FIRS)
[^3]: Nigeria Tax Treaties — PwC