Tax Guide for Freelancers & Remote Workers in Nigeria
If you're a freelancer, remote worker, or self-employed individual in Nigeria, you have specific tax obligations. This guide explains everything you need to know about paying taxes as a freelancer or remote worker under the 2026 Tax Act.
Freelancers and remote workers are considered self-employed for tax purposes. You're responsible for calculating and paying your own taxes, unlike employees who have PAYE deducted at source.
Who is Considered a Freelancer/Remote Worker?
You're a freelancer/remote worker if you:
- Work independently (not an employee)
- Receive income from multiple clients
- Work from home or remotely
- Earn income from foreign sources (remote work for international companies)
- Provide services on a project basis
- Don't have a fixed monthly salary
- Issue invoices to clients
Tax Obligations for Freelancers
1. Get a TIN
First step: Obtain a Tax Identification Number (TIN) from FIRS. You cannot file tax returns without a TIN.
2. Keep Detailed Records
Maintain records of:
- All income received (invoices, payments)
- All business expenses
- Bank statements
- Receipts for all purchases
- Client contracts and agreements
3. File Annual Tax Return
File your Personal Income Tax Return by March 31st of the following year.
4. Pay Estimated Tax
You may need to make advance tax payments if your income exceeds certain thresholds. Consult FIRS for details.
Tax on Foreign Income (Remote Workers)
If you're a resident of Nigeria (spent 183+ days in Nigeria), you're taxable on:
- Income earned from work performed in Nigeria (even for foreign clients)
- Income remitted to Nigeria from abroad
If you're a non-resident, you're only taxable on income from Nigerian sources.
Allowable Deductions for Freelancers
You can deduct legitimate business expenses from your income:
1. Home Office Expenses
If you work from home, you can deduct:
- Proportion of rent (based on office space percentage)
- Proportion of utilities (electricity, internet, water)
- Home office furniture and equipment
Example: If your home office is 20% of your home, you can deduct 20% of rent and utilities.
2. Equipment and Software
- Computers, laptops, tablets
- Software licenses
- Office equipment
- Internet and phone bills (business portion)
3. Professional Services
- Accounting fees
- Legal fees (for business matters)
- Consulting fees
- Professional development courses
4. Marketing and Business Development
- Website hosting and domain costs
- Marketing and advertising expenses
- Business cards and promotional materials
- Conference and networking event fees
5. Travel Expenses
- Business travel (to meet clients, attend meetings)
- Transportation costs
- Accommodation (for business trips)
Note: Only business-related travel is deductible.
6. Standard Deductions
You can also claim:
- Tax-free threshold: ₦800,000
- Rent relief: 20% of rent (max ₦500,000) if renting
- Pension contributions (if you contribute)
- NHF contributions (if applicable)
- NHIS contributions
- Life insurance premiums
How to Calculate Your Tax
- Calculate Total Income: Sum all income from freelancing/remote work
- Deduct Business Expenses: Subtract all allowable business expenses
- Apply Standard Deductions: Tax-free threshold, rent relief, etc.
- Calculate Taxable Income: Income - Expenses - Deductions
- Apply Tax Rates: Use progressive tax brackets (0% to 25%)
- Calculate Tax Due: Apply rates to taxable income
Use our tax calculator to estimate your tax liability.
Filing Your Tax Return
As a freelancer, you'll file a Personal Income Tax Return:
- Report all freelance/remote work income
- List all business expenses
- Claim all deductions
- Calculate and pay tax due
- File by March 31st deadline
Quarterly Tax Payments
If your annual income is significant, FIRS may require quarterly advance tax payments:
- Q1 (Jan-Mar): Due by April 21st
- Q2 (Apr-Jun): Due by July 21st
- Q3 (Jul-Sep): Due by October 21st
- Q4 (Oct-Dec): Due by January 21st
These are estimates based on projected annual income. Final reconciliation is done when filing annual return.
Special Considerations
Multiple Income Sources
If you have both employment income (PAYE) and freelance income:
- Report employment income from PAYE certificate
- Add freelance income separately
- Total all income sources
- Apply deductions to total income
- Calculate total tax, then subtract PAYE already paid
Foreign Currency Income
If you receive income in foreign currency:
- Convert to Naira using CBN exchange rate at time of receipt
- Report in Naira equivalent
- Keep records of exchange rates used
- If remitted to Nigeria, use remittance date exchange rate
Payment Platforms
Income received through platforms like:
- PayPal, Payoneer, Wise, etc. is taxable
- Keep records of all platform transactions
- Convert to Naira for tax purposes
- Report all income, even if not yet withdrawn
Record Keeping for Freelancers
Maintain these records:
- ✅ All invoices issued to clients
- ✅ Payment receipts and bank statements
- ✅ Expense receipts (keep all business expense receipts)
- ✅ Client contracts and agreements
- ✅ Equipment purchase receipts
- ✅ Software subscription receipts
- ✅ Travel and accommodation receipts (business-related)
- ✅ Professional development course receipts
- ✅ Home office calculation (if claiming home office deduction)
Retention Period: Keep records for at least 6 years (FIRS can audit)
Common Mistakes to Avoid
- ❌ Not reporting foreign income
- ❌ Not keeping proper expense records
- ❌ Mixing personal and business expenses
- ❌ Not filing because income is "small"
- ❌ Not claiming legitimate business deductions
- ❌ Forgetting to file by March 31st deadline
- ❌ Not converting foreign currency properly
- ❌ Not maintaining separate business bank account
Tips for Freelancers
- ✅ Open a separate business bank account
- ✅ Track income and expenses monthly
- ✅ Set aside 20-30% of income for taxes
- ✅ Use accounting software or apps
- ✅ Keep all receipts (take photos if needed)
- ✅ File on time to avoid penalties
- ✅ Consider hiring an accountant for complex situations
- ✅ Use our tax calculator regularly
Need Help?
- Contact FIRS for guidance on self-employment tax
- Consult a tax professional specializing in freelancers
- Use accounting software to track income and expenses
- Follow our filing guide
Calculate your estimated tax as a freelancer or remote worker.
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