---
title: "Nigeria"
id: "11776"
type: "global-payroll"
slug: "nigeria"
published_at: "2025-08-05T07:08:52+00:00"
modified_at: "2026-09-29T13:50:48+00:00"
url: "https://topsourceworldwide.com/global-payroll/nigeria/"
markdown_url: "https://topsourceworldwide.com/global-payroll/nigeria.md"
taxonomy_continent:
  - "Africa"
---

# Payroll Services in Nigeria

Nigeria replaced its personal income tax system on 1 January 2026: the Consolidated Relief Allowance is gone, the PAYE bands are new and FIRS is now the Nigeria Revenue Service. TopSource runs Nigerian payroll under the Act that is actually in force – new bands applied, rent relief declared, pension remitted and PAYE paid to the right state.

[Get in touch](https://topsourceworldwide.com/contact-us/)

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[Read reviews](#testimonials)

## What Nigerian payroll actually involves

Nigeria in 2026 runs a brand-new tax code, a state-level collection system, an employer contribution base that depends on how the offer letter is written, and a foreign exchange regime that can cost a parent company its right to repatriate capital. These are the five things that decide whether a Nigerian payroll is right.

### Working out which law applies, because it changed in January

The Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 took effect on 1 January 2026 and repealed the Personal Income Tax Act, its bands and its 24% top rate. FIRS became the Nigeria Revenue Service in June 2025. A payroll configured before 2026 is computing tax under a repealed Act.

### Recalculating what your people take home

The Consolidated Relief Allowance was abolished. In its place is a rent relief of 20% of annual rent paid, capped at NGN 500,000 – so an employee who rents gets it and one who owns their home does not. PAYE now starts at about NGN 118,000 a month for a renter and NGN 72,000 without rent relief.

### Paying the employer contributions, and structuring the package

Employer statutory cost is pension at a minimum of 10%, NSITF at 1% of payroll and the ITF levy at 1% of annual payroll. Pension runs on basic, housing and transport as a minimum rather than on gross, so total cost is about 8% of gross where those are 60% of the package and 12% where they are all of it.

### Remitting to the right state, not to the centre

PAYE is a state tax. It goes to the revenue service of the state where each employee lives, by the 10th of the following month, with an annual employer return by 31 January. Staff in Lagos, Abuja and Port Harcourt mean three authorities and three sets of practice.

### Getting the money in and out

A foreign company cannot carry on business in Nigeria without incorporating a Nigerian company: acts in breach are void, and tax registration does not cure it. And under the Central Bank’s foreign exchange manual, in force since June 2026, inbound capital must be registered for a certificate within 24 to 48 hours, or the right to repatriate it is at risk.

## Our Partners Globally

## Calculate Your Employee Costs in Nigeria

Enter a gross annual salary to see the employer cost in Nigeria: pension at the 10% minimum, NSITF at 1% and the ITF levy at 1%, plus indicative amounts for private health cover and group life. The calculator applies pension to the whole salary, the top of the range – if your packages put only basic, housing and transport into the pension base, the real figure is lower.

##### Employment Cost Calculator

*Indicative figures only and not definitive legal advice. Local regulations change frequently. [Consult an expert](/contact-us/)

##### Nigeria

  Annually Monthly

|  | British Pound | Nigeria |
| --- | --- | --- |
| Base Salary (per month) |  |  |
| Employer Contributions |  |  |
| Total Cost (Annual) |  |  |
| Total Cost (Monthly) |  |  |

Employer of Record services in [Learn more](#)
Payroll Outsourcing in [Learn more](#)

## Know your Nigerian hiring costs before you commit

Tell us the role, the salary and how the package is split – we’ll send back the full Nigerian employer cost, the PAYE under the 2026 bands and what the employee takes home, within one business day.

[Get a Custom Payroll Quote](https://topsourceworldwide.com/contact-us/)

> “Their expertise and understanding of the unique hiring, payment, and human resource practices in each country has been nothing short of outstanding. Our Client Success Manager, has done just that … ensured our success. Her availability and willingness to engage on a personal level has made all the difference.”

Director of Research Operations,

> “Excellent service, especially from our account manager who has gone above and beyond to help us use the platform effectively. Our manager, significantly simplifies my workload. It is like having your own TopSource HR representative on your team.”

Chief Human Resources Officer,

> “TopSource has been our go-to resource for international hiring. They are responsive, thorough, respectful and knowledgeable. The Client Success team has provided us with the utmost customer service, and the more we use TopSource, the more, it gives us access to more resources and knowledge.”

Senior Manager, Human Resources ,

## Employer Costs in Nigeria Explained

Employer statutory cost in Nigeria runs at roughly 8% to 12% of gross pay, and where it falls in that range is decided by package structure rather than salary. Pension is a minimum of 10%, charged on monthly emoluments of at least basic salary plus housing and transport allowances rather than on gross, so a package with 60% in those components costs 6% of gross in pension. NSITF adds 1% of monthly payroll and the ITF levy 1% of annual payroll. Nothing is capped, and group life cover of at least three times annual emoluments sits on top. Here’s the breakdown.

#### The Nigeria Tax Act 2025, and the bands that replaced PITA

On 1 January 2026 Nigeria replaced its personal income tax system. The Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 were signed on 26 June 2025 and took effect on 1 January 2026, and section 195 of the Tax Act repeals the Personal Income Tax Act outright – its bands, its 24% top rate and its reliefs. Two companion Acts, establishing the Nigeria Revenue Service and the Joint Revenue Board, took effect on signature, so the institutions existed six months before the new charging rules. The Federal Inland Revenue Service is now the Nigeria Revenue Service.

The new bands in the Fourth Schedule are more generous at the bottom and slightly higher at the top. The first NGN 800,000 of chargeable income is taxed at nil, the next NGN 2.2 million at 15%, the next NGN 9 million at 18%, the next NGN 13 million at 21%, the next NGN 25 million at 23%, and anything above NGN 50 million at 25%. Separately, sections 58 and 163 take anyone earning no more than the national minimum wage – NGN 70,000 a month – out of tax altogether.

Be careful with secondary summaries. A widely shared version gives the third and fourth bands as NGN 7 million at 18% and NGN 9 million at 21%; those figures do not add up to the NGN 50 million threshold where the top rate starts, and they are wrong. The bands above are taken from the Schedule itself.

The administration changed as much as the rates. Failing to deduct tax carries a penalty of 40% of the amount not deducted; deducting it and remitting late costs 10% a year plus interest; a late or inaccurate return costs NGN 100,000 and then NGN 50,000 for each further month. Employees must file their own annual return even where the employer files, and every deduction has to be claimed in writing, with the tax authority entitled to refuse any it cannot see evidenced.

#### The relief that was abolished, and the one that replaced it

The Consolidated Relief Allowance is gone. For years it gave every Nigerian employee a deduction of 20% of gross income plus the higher of NGN 200,000 or 1% of gross before the bands applied – a broad, unconditional relief that kept effective rates down. The Nigeria Tax Act does not carry it forward; the wider nil-rate band of NGN 800,000 is what replaced it.

What did arrive is a rent relief under section 30(2)(a)(vi): 20% of annual rent paid, capped at NGN 500,000, whichever is lower, provided the employee accurately declares the rent. It is conditional in a way the old allowance was not. An employee paying NGN 2.5 million a year or more in rent gets the full NGN 500,000; one who owns their home outright gets nothing. Two people doing the same job on the same salary now have different tax bills, and the employer is the one collecting the declarations.

That produces a threshold effect worth stating plainly. With pension relief at 8% of gross and the full rent relief, PAYE starts at an annual gross of about NGN 1.41 million – roughly NGN 118,000 a month. With no rent relief it starts at about NGN 870,000 a year, or NGN 72,000 a month. The same salary can be taxable for one employee and not for another.

The other deductions that survive are contributions to pension, the National Housing Fund and national health insurance, life assurance and deferred annuity premiums, and interest on a loan to build an owner-occupied home. That last one partly answers the homeowner’s position, but only where there is a loan. Every deduction must be claimed in writing, so a payroll that applied reliefs on an employee’s say-so needs a documented process.

#### Pension, the levies, and the structuring question that decides the bill

Pension under the Pension Reform Act 2014 is 8% from the employee and a minimum of 10% from the employer, or at least 20% where the employer chooses to bear the whole cost. The base is monthly emoluments, which the Act defines as whatever the employment contract says – but never less than basic salary plus housing and transport allowances. Nigerian packages are conventionally built from a stack of allowances, and the share sitting in those three components varies widely between employers, which makes the base the largest single lever in Nigerian employer cost.

The arithmetic is worth seeing. Where basic, housing and transport make up 60% of the package and the contract uses that minimum base, employer pension is 6% of gross and total statutory cost with the levies is about 8%. Where they make up the whole package, pension is 10% of gross and the total is 12%. Four points of gross – a third of the statutory bill – turn on a drafting decision made in the offer letter. It is legitimate, and it has a floor: pension is a benefit, and structuring it down reduces what the employee retires on.

Two employer-only levies sit alongside it. The employee compensation contribution to NSITF is at least 1% of total monthly payroll. The Industrial Training Fund levy is 1% of annual payroll, due by 1 April of the following year, for employers with five or more employees or turnover of NGN 50 million or more – either test is enough. Part of the ITF levy can be reclaimed against approved training, but it is prudent to budget it as a cost. Group life cover is also mandatory under section 4(5) of the Pension Reform Act: at least three times each employee’s gross annual emoluments, with the premium paid before cover starts. Pension itself must reach the fund custodian within seven working days of payday.

The National Housing Fund needs its own paragraph, because the position changed and much guidance has not caught up. The Business Facilitation (Miscellaneous Provisions) Act 2022, in force since February 2023, changed the 2.5% contribution from ‘shall’ to ‘may’ for private sector employees. It is voluntary for them, so it should be deducted only where the employee has agreed. Many international guides still list it as compulsory, and payrolls configured from them are still taking it.

#### Leave, dismissal, and the two-tier structure nobody explains

The most important structural fact about Nigerian employment law is that the Labour Act does not cover most of the people an international employer hires. It applies to ‘workers’ – manual and clerical staff – and section 91 excludes anyone exercising administrative, executive, technical or professional functions. Its minimums are a floor for one population and irrelevant to another, and a guide that presents them as the national standard is describing the wrong workforce.

For those it does cover, the floor is low. Annual leave is six working days after twelve months’ continuous service (section 18) – among the lowest statutory entitlements anywhere. Sick leave is up to twelve working days a year on full pay (section 16). Maternity leave is twelve weeks, paid at no less than 50% for a woman with six months’ service (section 54). For professional and managerial staff none of this binds: market practice is 20 to 25 days of annual leave and fuller maternity pay, set by contract. The contract is the instrument that matters.

There is no statutory redundancy pay. Section 20 requires the employer to inform the workers’ representatives, apply last-in-first-out subject to skill and merit, and use its best endeavours to negotiate redundancy payments – not to make one. Notice under the Act runs by length of service for covered workers; for everyone else it is whatever the contract says.

Dismissal is unsettled, and both confident answers in circulation are wrong. The National Industrial Court has, in a line of cases, required a valid reason for termination, drawing on international labour standards through section 254C of the Constitution. The Court of Appeal, which hears appeals from it, restated the common law position in Oak Pensions v Olayinka (2017): an employer that follows the contract may terminate without giving a reason. The two positions have not been reconciled, so the practical advice is to terminate as though a valid reason is required, and to document it.

#### Entity, expatriates, and getting money in and out

A foreign company cannot lawfully run a Nigerian payroll without incorporating. Section 78 of the Companies and Allied Matters Act 2020 requires a foreign company that intends to carry on business in Nigeria to incorporate a Nigerian company, and any act in breach is void. The exemptions in sections 80 to 83 are narrow – projects for the government or for international donors, for example – and registering for tax does not cure the position. The realistic options are to incorporate a subsidiary or to engage through an employer of record that already has one.

Expatriate employment runs through the Ministry of Interior’s expatriate quota system, with a combined expatriate residence permit and aliens card for each foreign employee and Nigerian understudies attached to quota positions. The Expatriate Employment Levy is the item most often misreported: announced in February 2024 at USD 15,000 a year for a director and USD 10,000 for other expatriates, it was suspended in March 2024 before it took effect, and had not been reinstated by September 2026. It has not been repealed either, so a multi-year expatriate programme should treat it as a live possibility.

Foreign exchange is where Nigerian operations most often fail in practice, and it is almost absent from payroll guidance. The Central Bank’s Foreign Exchange Manual, fourth edition, in force since 1 June 2026, requires transactions between Nigerian parties to be priced and settled in naira outside a few exempt sectors. For the parent company, inbound capital must be registered for an electronic certificate of capital importation within 24 to 48 hours of arrival. Without it, the right to repatriate that capital and the dividends on it is at risk.

The sequence for a foreign group is therefore: incorporate; register for tax and with each relevant state revenue service; open naira accounts; register every capital inflow for its certificate at once; register with PenCom and choose a pension fund administrator; place group life cover; and only then run the first payroll. Several of these cannot be done retrospectively.

## Nigeria PAYE bands, contributions and thresholds, 2026

| Item | Employee | Employer | Detail, and the instrument |
| --- | --- | --- | --- |
| PAYE – first NGN 800,000 | 0% | — | Of chargeable income. Nigeria Tax Act 2025, Fourth Schedule, in force 1 January 2026 |
| PAYE – next NGN 2,200,000 | 15% | — | Cumulative to NGN 3,000,000 |
| PAYE – next NGN 9,000,000 | 18% | — | Cumulative to NGN 12,000,000 |
| PAYE – next NGN 13,000,000 | 21% | — | Cumulative to NGN 25,000,000 |
| PAYE – next NGN 25,000,000 | 23% | — | Cumulative to NGN 50,000,000 |
| PAYE – above NGN 50,000,000 | 25% | — | Top rate. The old 24% top rate went with the Personal Income Tax Act |
| Minimum wage earners | Exempt | — | Employment income of no more than the national minimum wage (NTA ss.58 and 163) |
| Consolidated Relief Allowance | Abolished | — | The 20% of gross plus NGN 200,000 deduction did not survive into the Nigeria Tax Act |
| Rent relief | Up to NGN 500,000 | — | The lower of 20% of annual rent paid or NGN 500,000 (NTA s.30(2)(a)(vi)). Homeowners get nothing |
| Pension | 8% | 10% | Minimums, on monthly emoluments of at least basic + housing + transport (Pension Reform Act 2014). 20% if the employer bears it all |
| Group life assurance | — | Mandatory | Cover of at least 3 × gross annual emoluments (Pension Reform Act 2014 s.4(5)) |
| NSITF – employee compensation | — | 1% | Of total monthly payroll. Employer only |
| ITF – industrial training levy | — | 1% | Of annual payroll, due by 1 April. 5+ employees OR turnover of NGN 50m or more |
| National Housing Fund | 2.5% | — | Voluntary for private sector employees since February 2023 (Business Facilitation Act 2022) |
| National minimum wage | — | — | NGN 70,000 a month since July 2024. Reviewed every three years; next due 2027 |
| Accommodation benefit | Capped | — | Taxed at annual rental value, up to 20% of annual gross employment income (NTA s.14(6)) |
| Development levy | — | — | 4% of company assessable profits (NTA s.59). A corporate tax: it does not touch payroll |
| Penalties | — | — | 40% of tax not deducted; 10% a year plus interest on late remittance; NGN 100,000 then NGN 50,000 a month for late returns (NTAA 2025) |

### The new Acts, and the employment law positions guides get wrong

| Item | Position for 2026 | Instrument | Why it matters |
| --- | --- | --- | --- |
| Nigeria Tax Act 2025 | In force from 1 January 2026 | Signed 26 June 2025 | Repeals the Personal Income Tax Act, its bands and its 24% top rate (s.195) |
| Nigeria Tax Administration Act 2025 | In force from 1 January 2026 | Signed 26 June 2025 | Penalties, assessments and filing duties |
| Nigeria Revenue Service | Replaced FIRS on 26 June 2025 | NRS (Establishment) Act 2025 | In force on signature, six months before the new charging rules |
| Joint Revenue Board | Established 26 June 2025 | JRB (Establishment) Act 2025 | Harmonises administration across states. PAYE remains a state tax |
| PAYE remittance | To the state of residence, by the 10th | State revenue services | Staff in three states means three authorities |
| Annual employer return | By 31 January | NTAA 2025 s.14 | Filed with each state, as Form H1 |
| Employee annual return | Required | NTAA 2025 s.14(3) | Even where the employer files |
| Labour Act coverage | ‘Workers’ only | Labour Act s.91 | Excludes administrative, executive, technical and professional staff |
| Annual leave | 6 working days | Labour Act s.18 | After 12 months, covered workers only. Professionals: 20–25 days by contract |
| Statutory redundancy pay | None | Labour Act s.20 | Consultation and last-in-first-out; a payment is only to be negotiated |
| Unfair dismissal | Unsettled | NICN vs Court of Appeal | NICN case law requires a valid reason; the Court of Appeal did not in Oak Pensions v Olayinka (2017) |
| Foreign company running payroll | Not permitted | CAMA 2020 s.78 | Must incorporate. Acts in breach are void; tax registration does not cure it |
| Expatriate Employment Levy | Suspended, not repealed | Announced Feb 2024, suspended Mar 2024 | USD 15,000 a director / USD 10,000 other expatriates, if reinstated |
| Foreign exchange | Naira between Nigerian parties | CBN FX Manual, from 1 June 2026 | Capital inflows need a certificate within 24–48 hours to protect repatriation |

### PAYE across the salary range under the Nigeria Tax Act, 2026 (NGN)

| Annual gross | Pension 8% | Rent relief | Chargeable income | PAYE a year | Effective rate | PAYE a month | Net a month |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 840,000 | 67,200 | 500,000 | 272,800 | 0 | 0.0% | 0 | 64,400 |
| 1,500,000 | 120,000 | 500,000 | 880,000 | 12,000 | 0.8% | 1,000 | 114,000 |
| 3,000,000 | 240,000 | 500,000 | 2,260,000 | 219,000 | 7.3% | 18,250 | 211,750 |
| 6,000,000 | 480,000 | 500,000 | 5,020,000 | 693,600 | 11.6% | 57,800 | 402,200 |
| 12,000,000 | 960,000 | 500,000 | 10,540,000 | 1,687,200 | 14.1% | 140,600 | 779,400 |
| 30,000,000 | 2,400,000 | 500,000 | 27,100,000 | 5,163,000 | 17.2% | 430,250 | 1,869,750 |
| 60,000,000 | 4,800,000 | 500,000 | 54,700,000 | 11,605,000 | 19.3% | 967,083 | 3,632,917 |

Nothing in the Nigerian employer stack is capped: pension, NSITF and the ITF levy run at flat percentages at every salary. PAYE applies to chargeable income – gross pay less pension, rent relief and the other surviving deductions – not to gross. The salary table is a TopSource calculation, not a published table: it assumes employee pension at 8% of gross (where the pension base is smaller, the relief is smaller and the tax higher), the full NGN 500,000 rent relief, which needs annual rent of NGN 2.5 million or more, declared, and no National Housing Fund, health insurance or life assurance deductions. The first row is the national minimum wage, which is exempt.

Rates and thresholds are for 2026, the first year of the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025, and were verified on 29 September 2026; administrative practice under the new Acts is still settling. PAYE is a state tax, and remittance runs to each state revenue service separately. The Expatriate Employment Levy is suspended, not repealed. This page is general information, not tax or legal advice.

[Get a Custom Payroll Quote](https://topsourceworldwide.com/contact-us/)

## How our Nigeria payroll service works

1. Map your setup

We start with the entity question, because in Nigeria it has one answer: a foreign company must incorporate before carrying on business, and acts in breach are void. We then work out which states your people live in, because each state revenue service is a separate filing relationship, and how your packages are split, because the share in basic, housing and transport sets your pension bill – a swing of four points of gross.

2. Migrate or onboard

Incorporation or an employer of record arrangement, federal and state tax registration, PenCom registration and a pension fund administrator, group life cover, NSITF and ITF registration, and naira accounts. On a migration the first four things we check are whether PAYE is still computed on the repealed bands, whether rent relief is claimed with written declarations, whether the National Housing Fund is taken from private sector employees who never agreed to it, and whether every capital inflow has its certificate.

3. Run and review

PAYE on the 2026 bands against chargeable income after pension, rent relief and the other surviving deductions, with the minimum wage exemption applied where it bites. Pension at 8% and 10% on the contractual base, never below basic, housing and transport. NSITF at 1% of monthly payroll. Group life kept at three times annual emoluments as salaries move. And benefits in kind valued under the new rules, including the 20% cap on accommodation.

4. File and pay

PAYE to each state revenue service by the 10th of the following month, and the annual employer return to each of them by 31 January. Pension to the fund custodian within seven working days of payday. NSITF monthly, and the ITF levy by 1 April. The penalties are sharp – 40% of any tax not deducted, and 10% a year plus interest on late remittance – so the calendar is part of the compliance, not an afterthought.

5. Stay current

2026 is the first year of an entirely new tax code, and guidance under it is still arriving. The minimum wage is due for review in 2027 under the three-year cycle, and PenCom said in July 2026 that the employer pension rate will rise as part of a review of the Pension Reform Act – no figure has been set. We track the Acts and the regulators rather than the commentary, and tell you when a rate actually moves.

## Why TopSource for Nigerian Payroll

TopSource for payroll, Employer of Record or any other of our services represents a simpler, more reliable and transparent option.

We don’t hide fees or sneak price increases. We run Nigerian payroll under the Act that is actually in force, remit to each state your people live in, and will tell you plainly that a foreign company must incorporate before it trades here – or employ through our Employer of Record service instead. You get a named account manager, one consolidated monthly invoice covering salaries, contributions, taxes and fees, and one live Portico view of Nigeria beside every other country we run for you. Portico syncs with your time-tracking, leave and HR systems via API – set up by our onboarding team, not left to yours. GDPR, SOC 2 and ISO 27001 certified.

[Global Payroll](https://topsourceworldwide.com/global-payroll/)
[Get Started](https://topsourceworldwide.com/contact-us/)

## Other services Accelerating your growth in Nigeria and beyond

#### TopSource goes far beyond payroll, acting as your end-to-end partner in global workforce management. From Employer of Record (EOR) services and seamless entity setup to localized accountancy and fractional HR support, we cover every aspect of international employment.

### Global Employer of Record (EOR) services

With our Global EOR services, you can hire talent in any country without establishing a legal entity. We handle employment contracts, payroll, benefits, and compliance on your behalf, enabling fast, risk-free global expansion.

### Actionable HR Advisory

On demand access to our fractional and regional HR professionals who understand local laws, cultures, and best practices. Bespoke talent intelligence including salary, business and talent market benchmarking.

### Global entity management

Our global entity management team helps you establish and maintain your corporate entities worldwide. We ensure full compliance with local laws and regulations, streamline administrative processes, and minimize risk — so you can focus on growing your business.

### Accounting

We offer comprehensive accounting solutions tailored to meet your international needs. From bookkeeping and financial reporting to tax filings and audits, our services help you maintain transparency, accuracy, and compliance in every jurisdiction.

## Meet our experts for Nigeria

Whether you’re entering the market or scaling operations, our specialists provide the insight and guidance you need to succeed in one of the world’s most dynamic and regulated employment landscapes. With TopSource, you’re backed by real experts, every step of the way.

[Our People](https://topsourceworldwide.com/our-people/)

## Beyond a payroll service **A globalization accelerator**

A payroll platform for your employees is just the beginning. We are constantly evaluating your entire organisation to identify compliance issues and ways to accelerate your global growth.

- [Payroll platform](#)
- [Audit](#)
- [Intelligence](#)
- [Advisory](#)

##### Payroll platform

###### Global payroll simplified

Your intuitive hub for paying global teams. Simple, powerful, and designed to scale with you — no complexity, just clarity.

##### Audit

###### Eliminate barriers to growth

Avoid compliance issues across your global workforce and uncover opportunities to improve profitability. On a quarterly basis we’ll help you audit your global talent strategy to ensure it aligns with your business goals.

##### Intelligence

###### Build a data-driven talent strategy

Grow confidently and profitably with access to the latest TopSource insights & data on hiring markets, salary benchmarking & benefits.

##### Advisory

###### Expert guidance that turns complexity into clarity.

Whether you’re managing a global acquisition or entering a new market, you get clear guidance to navigate complex decisions, avoid delays, and accelerate your global expansion.

## Nigerian payroll FAQs

### How much does it cost an employer to employ someone in Nigeria?

Employer statutory cost in Nigeria is roughly 8% to 12% of gross pay, and where it falls depends on how the package is structured rather than on salary level. Pension is a minimum of 10%, charged on monthly emoluments of at least basic salary plus housing and transport allowances rather than on gross, so where those make up 60% of the package the pension cost is 6% of gross. NSITF adds 1% of monthly payroll and the ITF levy 1% of annual payroll, both employer-only. Group life cover of at least three times annual emoluments sits on top, priced by the insurer. Nothing is capped at any salary.

### Did Nigeria’s tax reform actually take effect?

Yes. The Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 were signed on 26 June 2025 and took effect on 1 January 2026 – the commencement date is printed on the Acts themselves, and it was not deferred. The Tax Act repeals the Personal Income Tax Act outright. Two companion Acts took effect on signature in June 2025: the Nigeria Revenue Service (Establishment) Act, under which the Federal Inland Revenue Service became the Nigeria Revenue Service, and the Joint Revenue Board (Establishment) Act. Any Nigerian payroll still computing tax on the old bands is applying a repealed statute.

### What are the new PAYE rates in Nigeria for 2026?

Under the Fourth Schedule to the Nigeria Tax Act 2025, the first NGN 800,000 of chargeable income is taxed at nil, the next NGN 2.2 million at 15%, the next NGN 9 million at 18%, the next NGN 13 million at 21%, the next NGN 25 million at 23%, and anything above NGN 50 million at 25%. Employment income of no more than the national minimum wage – NGN 70,000 a month – is exempt altogether under sections 58 and 163. Be careful with secondary summaries: a widely shared version gives the third and fourth bands as NGN 7 million and NGN 9 million, which does not add up to the NGN 50 million top threshold and is wrong.

### What replaced the Consolidated Relief Allowance in Nigeria?

A rent relief, and it is much narrower. The Consolidated Relief Allowance gave every employee 20% of gross plus the higher of NGN 200,000 or 1% of gross, unconditionally, and it did not survive into the Nigeria Tax Act. In its place, section 30(2)(a)(vi) allows 20% of annual rent paid, capped at NGN 500,000, provided the employee accurately declares the rent – so an employee who rents gets it and one who owns their home outright gets nothing. The effect is a gap in where tax starts: with full rent relief, PAYE begins at about NGN 118,000 a month of gross; with none, at about NGN 72,000.

### What are the pension contribution rates in Nigeria?

Eight per cent from the employee and a minimum of 10% from the employer under the Pension Reform Act 2014, or at least 20% where the employer chooses to bear the whole cost. The base is monthly emoluments – whatever the employment contract defines, but never less than basic salary plus housing and transport allowances – which is why package structure moves the employer’s bill. Contributions must reach the pension fund custodian within seven working days of payday, and group life cover of at least three times annual emoluments is separately mandatory. The Act applies in full to private employers with 15 or more employees. PenCom said in July 2026 that the employer rate will rise under a review of the Act; no figure has been set.

### Is the National Housing Fund deduction compulsory in Nigeria?

Not for private sector employees. The Business Facilitation (Miscellaneous Provisions) Act 2022, in force since February 2023, changed the wording of the 2.5% contribution from ‘shall’ to ‘may’ for the private sector, making it voluntary. It should therefore be deducted only where the employee has agreed to contribute. Public sector employees are still required to contribute. Many international guides still list it as a mandatory employee deduction, and payrolls configured from them are taking a contribution the law no longer requires.

### How much annual leave do Nigerian employees get?

Six working days after twelve months of continuous service under section 18 of the Labour Act – among the lowest statutory entitlements anywhere, and it applies to a narrower population than most people assume. The Act covers ‘workers’ in manual and clerical roles, and section 91 excludes anyone exercising administrative, executive, technical or professional functions. For most of the people an international employer hires in Nigeria, the Labour Act minimum does not apply and leave is whatever the contract says; market practice for professional staff is 20 to 25 days. For covered workers the Act also gives up to twelve working days of paid sick leave and twelve weeks of maternity leave at no less than 50% of pay.

### Can you dismiss an employee at will in Nigeria?

Not safely, because the law is unsettled. The National Industrial Court has in a line of cases required a valid reason for termination, applying international labour standards through section 254C of the Constitution. The Court of Appeal, which hears appeals from it, restated the common law position in Oak Pensions v Olayinka (2017): an employer that follows the contract may terminate without giving a reason. The two positions have not been reconciled. In practice, terminate as though a valid reason is required and document it. There is also no statutory redundancy pay: the Labour Act requires consultation, last-in-first-out and an effort to negotiate a payment, not the payment itself.

### Does the Expatriate Employment Levy still apply in Nigeria?

No – it is suspended, not repealed, and the distinction matters. The levy was announced in February 2024 at USD 15,000 a year for each expatriate director and USD 10,000 for other expatriate employees, and was suspended in March 2024 before it took effect, after objections from business. It had not been reinstated by September 2026, but because it was never repealed, a multi-year expatriate programme should treat reinstatement as a live possibility. The expatriate quota system, the combined residence permit and the requirement to attach Nigerian understudies to quota positions all continue to apply.

### Can a foreign company run payroll in Nigeria without a local entity?

No. Section 78 of the Companies and Allied Matters Act 2020 requires a foreign company that intends to carry on business in Nigeria to incorporate a Nigerian company, and any act in breach is void. Registering for tax does not cure the position, and the exemptions are narrow. The realistic options are to incorporate a subsidiary or to engage people through an employer of record that already has one. There is a related trap: under the Central Bank’s Foreign Exchange Manual, in force since 1 June 2026, inbound capital must be registered for an electronic certificate of capital importation within 24 to 48 hours of arrival, or the right to repatriate it is at risk.

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