An individual client's foreign income and tax credits
How a Nigerian-resident individual's foreign income is taxed, how tax paid abroad is credited under unilateral relief, and the evidence a firm needs.
By Achekam · · 5 min read · For Accountants & audit firms in Nigeria
A doctor in Abuja does locum shifts in the United Kingdom twice a year. A retired engineer in Lagos draws a pension from his former employer abroad. A young developer works remotely for a European start-up and is paid into a foreign account. Each of them lives in Nigeria, each has income from outside it, and each has probably had tax deducted somewhere else already.
When these clients come to a firm, they usually ask the same thing: "I've already paid tax on this. Do I have to pay again?" The answer depends on residence, on unilateral relief or a treaty, and on evidence the client often does not have to hand.
Residents are taxed on worldwide income
PwC's Worldwide Tax Summaries state that individuals resident in Nigeria are taxed on their worldwide income. The location of the employer, the bank account or the work does not take foreign income out of the Nigerian computation for a resident.
That makes residence the first question on the file. Establish, and record, why the firm considers the client resident in Nigeria for the year. A client who spent much of the year abroad may have a different answer, and the rest of the computation depends on getting it right.
The NRS's individual income tax page adds a related point about who must file. It says Nigerian residents aged 18 and above earning income from Nigerian sources must file personal income tax returns, including salaried employees, the self-employed and people with investment, rental or business income, and that non-residents receiving Nigerian-sourced income must also file. Where a resident client with foreign income also earns anything from Nigerian sources, that page leaves no doubt that a return is required.
Unilateral relief and treaty claims
Paying tax twice on the same income is what relief exists to prevent. According to PwC, tax already paid abroad on foreign income that is also taxable in Nigeria may be credited against the Nigerian tax under unilateral relief. PwC notes this is consistent with the NRS's own FAQ on unilateral relief.
The NRS has also published guidance on the mechanics. Its Tax Guides page lists information circulars on the claim of tax treaty benefits and unilateral credit relief, as well as on the ascertainment of chargeable gains. The NRS library of guidelines and information circulars is where those documents are published, and the relief circular should be read before any credit is claimed, because it governs how the claim is made and supported.
Two routes therefore exist:
| Route | When it applies | What the firm checks |
|---|---|---|
| Treaty relief | Nigeria has a tax treaty with the other country | The treaty's terms and the NRS circular on claiming treaty benefits |
| Unilateral relief | No treaty, or the treaty does not cover the income | The NRS circular on unilateral credit relief |
Whichever route applies, the claim stands on proof that the foreign tax was actually paid.
Bands and reliefs come first, then the credit
The foreign income joins the client's other income in the Nigerian computation. Under the Nigeria Tax Act, 2025, an individual's taxable income is taxed, after reliefs and exemptions, at the following rates at the time of writing:
| Taxable income band | Rate |
|---|---|
| First ₦800,000 | 0% |
| Next ₦2,200,000 | 15% |
| Next ₦9,000,000 | 18% |
| Next ₦13,000,000 | 21% |
| Next ₦25,000,000 | 23% |
| Above ₦50,000,000 | 25% |
The Act lists eligible deductions such as National Housing Fund, National Health Insurance Scheme and pension contributions, interest on a loan for an owner-occupied home, life assurance premiums and rent relief, and requires deductions to be claimed in writing in the form the relevant tax authority prescribes. Check the Act and the authority's current guidance before relying on any of these figures. How the bands work for employees is explained in PAYE bands from 2026.
Only once the Nigerian tax on total income is known does the foreign tax credit come in, set against the Nigerian tax as the relief rules allow. Read the circular for how the credit is calculated and limited before putting a figure on it.
Getting the evidence from the client
The usual weakness in these files is evidence. Clients keep payslips but not foreign tax certificates, or bank statements showing net receipts with no record of what was deducted.
In Achekam, staff can create, send and track requests to the client for documents, answers and confirmations in one RFI console. For a foreign-income client, a single request can ask for:
- foreign payslips or income statements for the year;
- the foreign tax return or assessment, if one was filed;
- certificates or receipts showing foreign tax paid;
- a calendar of days spent in and out of Nigeria, to support residence;
- confirmation of any other foreign income, such as rent or dividends.
The request and the client's responses stay together, so the file shows what was asked, what arrived and what is still missing when the return is reviewed.
Where the individual's return sits in the firm's workflow
Achekam taxes a client where the client is, meaning its country of incorporation or tax residence, not where the firm is, and it creates no Nigerian or Kenyan tax profile for a client in a country without a pack. For a Nigerian-resident individual, staff can open a Nigerian tax profile for the client and start returns that move through prepare, review and approve by different people.
The taxes Achekam's Revenue Service Centre computes for Nigeria, once its rules are approved, are company income tax with the Development Levy, VAT, withholding tax, capital gains and stamp duty. An individual's foreign income and the credit for foreign tax should therefore be worked out in the firm's own working paper, reviewed by a second person, and kept with the evidence. Companies with foreign income face their own rules, covered in foreign income of Nigerian companies.
Identify every individual client who earned anything abroad this year. Send each one a request for foreign tax evidence now, months before the return is due, and read the NRS relief circulars so the credit is claimed on the basis the NRS has published.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
