Nigeria’s new tax policy, signed into law in June 2025, is shaking things up for freelancers and ignoring it could mean hefty fines or even jail time. From stricter enforcement to digital tracking, the rules are tighter, but they also bring reliefs that could save you money.
Whether you’re designing websites for global clients or running digital marketing from Lagos, these key tax changes affect you. Here’s everything you need to know to stay compliant and keep more of your earnings. Let’s break it down!
What’s New in Nigeria’s Tax Policy?
In June 2025, President Bola Tinubu signed four major tax reform bills, overhauling Nigeria’s tax system for the first time in decades. Here’s the rundown:
– Nigeria Tax Act: Merges over 50 tax laws into one clear code, simplifying rules for freelancers.
– Tax Administration Act: Standardizes tax collection across federal, state, and local levels, with digital-first enforcement.
– Nigeria Revenue Service (NRS) Act: Replaces FIRS with a modern, transparent agency, using BVN-linked tracking.
– Joint Revenue Board Act: Improves dispute resolution with tools like a Tax Appeal Tribunal.
These changes aim for a unified, enforceable system, but they mean freelancers must step up their game. Your income whether local or global is now more visible, thanks to digital tracking and global tax treaties.
How Do These Tax Policy Changes Affect Freelancers?
Freelancers are self-employed, so you’re on the hook for your own taxes. Here’s what applies:
– Personal Income Tax (PITA): You pay tax on profits (income minus allowable expenses like internet, software, or home office costs). Goodnews: The first ₦800,000 of your annual income is now tax-free.
– Value Added Tax (VAT): At 7.5%, VAT applies if your turnover exceeds ₦25 million annually. Most freelancers don’t hit this, but if you do, you can pass it to clients (e.g., charge ₦325,500 instead of ₦300,000, clearly stating VAT).
– Withholding Tax: Clients may deduct 5-10% from payments and remit it to the government. Check your contracts!
– Exemptions: If you earn less than ₦300,000 yearly? You’re likely tax-exempt, but you still need a Tax Identification Number (TIN).
Why Is This Important For Freelancers/Remote Workers:
Tax evasion is no joke, the penalties include 10% extra on unpaid taxes or even a year in jail. Plus, Nigeria’s new digital tracking links your income to your BVN, so hiding earnings is tougher.
There’s a good news:
– Tax Breaks for Creatives: You can work with startups under the Nigeria Startup Act or in Research and Development? You might qualify for incentives.
– Deductible Expenses: Claim costs like courses, equipment, or internet to lower your tax bill.
– Easier Compliance: The unified tax code and digital tools make filing simpler if you stay organized.
How To Stay Compliant And Save Money
- Get a TIN: Register with the Nigeria Revenue Service (NRS, formerly FIRS) for a Tax Identification Number. It’s free and mandatory for tax filing.
- Track Income: Use tools or your dashboard on VitalSwap to monitor earnings, especially foreign income at CBN rates.
- Record Expenses: Log deductible costs (e.g., internet, courses) to reduce taxable income. Keep receipts!
- File Annually: Submit self-assessed taxes (1% of turnover or 5% of profit, whichever’s higher) by March 31.
- Consult a Pro: A tax advisor can uncover deductions or incentives, saving you thousands.
Conclusion
Don’t let this new tax policy changes affect your freelance game. Nigeria’s new tax policy is here to stay, and enforcement’s only getting tighter. Don’t risk fines or lost gigs by ignoring it.
