Population: (2022 est.) 217,376,000
Monetary Unit: Nigerian Naira (NGN)
Language(s): English (Official Language), Yoruba, Igbo, Hausa, etc.
Nigeria is the largest economy (21st largest in the world) and the most populous country in Africa. It has an emerging market and a re-emergent manufacturing sector that caters to the demands of the West Africa subcontinent. Nigeria is largely dependent on its oil and natural gas exports for its economy, but the country encourages the inflow of foreign investments for industrial diversification. Foreign and domestic investors are treated equally, especially those companies are encouraged that are interested in joint ventures and long-term investment.
The list of public holidays in Nigeria are as follows;
- 1 Jan New Year’s Day
- 2 Jan New Year Holiday
- 7 Apr Good Friday
- 10 Apr Easter Monday
- 21 Apr Id el Fitri
- 22 Apr Id el Fitri Holiday
- 1 May Labour Day
- 12 Jun Democracy Day
- 28 Jun Id el Kabir
- 29 Jun Id el Kabir Holiday
- 27 Sep Id el Maulud
- 1 Oct National Day
- 2 Oct National Day Holiday
- 25 Dec Christmas Day
- 26 Dec Boxing Day
The law does not prescribe the maximum length of probation periods. But in practice, probationary periods for employees are between three (3) and six (6) months
A worker is entitled to annual leave of at least six working days with full salary. The annual leave is increased to at least twelve working days for young workers (under sixteen) including apprentices. A worker must have worked for at least twelve months in order to qualify for annual leave.
Female employees are entitled to 16 weeks of maternity leave at full pay if they are employed in the public sector and 12 weeks of maternity leave (six weeks before and after childbirth, each) if employed in the private sector at 50% of pay. The remuneration can be increased to full pay by contract. Female employees are also given half an hour twice a day for nursing their infants.
Paid paternity leave is available in the Lagos and Enugu States of 2 weeks and 3 weeks respectively.
In general, employees are entitled to 12 days of paid sick leave per year.
There is no provision in the Nigerian Labour Law for severance pay. The employer is not required to make any severance payments. Severance pay, on the other hand, may be specified in an employment contract or collective agreement.
13th / 14th Month Pay: There are no legal requirements for 13th-month wage payments in Nigeria. On the other hand, Bonuses are frequent at the employer’s discretion. However, in some states the governors have made it mandatory, but it is not a nation-wide requirement. Despite this, through collective bargaining and companies’ culture, the payment of the 13th month is widely observed.
Types of Work Visas in Nigeria
There are four primary types of visas offered in Nigeria:
- Tourist visa
- Business visa
- Temporary work permit
- Subject to Regularization (STR) visa
There are a few more visas, such as those for transit and diplomatic travel. Each of these three-month-valid visas is given to permit entrance into Nigeria. An STR visa must be obtained by foreign nationals who wish to work in Nigeria. The ability to work legally in Nigeria is not granted by this visa, nevertheless. Additionally, they will require a CERPAC, often known as an alien card, which allows them to live and work in Nigeria.
Requirements to Obtain Nigeria Work Visas
To live and work in Nigeria, employees will need to start by obtaining an STR visa. The following documents are required:
- A formal application from the sponsoring employer in Nigeria
- A passport with a minimum of two blank pages and six months of validity
- Proof of sufficient financial means
- Two valid passport-size photos
- A completed visa application form
- A letter containing a job offer from a company in Nigeria and an acceptance letter from the employee
- A copy of the employee’s CV and relevant educational qualifications
- Expatriate quota approval
To obtain a CERPAC card, applicants will need to provide the following documents:
- An application letter from the Nigerian employer accepting Immigration Responsibility and requesting that the employee’s stay be regularized
- A letter of employment and acceptance of the job offer
- A duly completed application form
- Proof of expatriate quota approval
- Three passport photos, the applicant’s passport, which should have STR visa endorsement
- A business permit
- Proof of payment for any applicable fees.
It may be helpful to divide the application process into two parts: the steps to be taken in the employee’s country of residence, and the steps that should be taken upon the employee’s arrival in Nigeria. Before leaving their home country, employees need to:
- Sign an employment contract with a company in Nigeria
- Complete an online application for an STR visa through the Nigerian Immigration Service
- Contact the Nigerian embassy in their country with the relevant paperwork, including proof of payment of the application fee.
Usually, applications are handled in seven days. The employee can fly to Nigeria and complete the remaining procedures after receiving a STR visa, including applying for regularization, requesting a CERPAC card from the National Immigration Service, and acquiring an Aliens Registration Card. The employee can reside and work in Nigeria lawfully after acquiring a CERPAC card. The CERPAC is issued for a two-year initial period, after which it may be renewed.
Should a foreign employee need to remain in Nigeria for more than two years, your company needs to be aware of the process for renewing their CERPAC. Applicants for CERPAC renewal will need to provide:
- The original card that is expiring
- A valid passport, along with copies of any pages that are relevant
- Proof of quota approval
- A letter from the employer requesting the renewal of the card
These requirements also apply to the replacement process if the card is lost.
Either party may terminate the employment agreement at any time, with or without cause, by giving the other party written notice within the stipulated time frame. A contract of employment is terminated when the time period for which it was signed expires, the employee passes away prior to the contract’s expiration date, or by giving notice for the time period required by law.
The duration of service affects the amount of notice that must be given to cease an employment relationship. For an employee who has been with the company for three months or more, the employer is not required to pay the employee for any time the employee is absent from work due to a leave of absence that was authorized by the employer at the employee’s request. The worker must get all payments due to them on or before the notice period expires. Neither party is required to give notice, and money in place of notice is permissible. The basic pay is taken into consideration while calculating it, however overtime and other allowances are not included.
According to the legislation, these benefits are required. These include the notice period, the probationary period, yearly leave, public holidays, sick leave, maternity leave, paternity leave, and overtime pay. In addition to the above benefits, social security benefits like as pension funds, employee remuneration, life insurance and required health insurance are also included.
As specified under the National Minimum Wage Act, Normal full time working hours are forty hours per week. The labor law requires one 24-hour rest period every seven days and a one-hour break per six hours of work.
Employers are required to pay these workers minimum wage and overtime pay if they work more than 40 hours in a week. Under the Fair Labor Standards Act, employees must be paid one-half more than their hourly rate for overtime pay.
Depending on the duration of service, a notice period may be necessary to terminate an employment contract. The notification period is as follows: –
- one day for a period of three months or less
- one week for more than three months but less than two years of service
- two weeks for two to five years of service and
- one month for five or more years
Nigeria follows a progressive rate. The table below shows a summary of the taxable income tax bands and applicable rates of tax on an annual basis.
Annual income (NGN) Personal Income Tax (PIT) 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
Note that employees who earn not more than the national minimum wage (currently NGN 30,000) are no longer liable to tax or deduction of monthly pay-as-you-earn (PAYE).
Pension: The mandatory minimum contribution to the Nigerian Pension Scheme is 18% of an employee’s monthly emoluments. Employers and employees are required to make contributions of 10% and 8%, respectively. Monthly emoluments are total emoluments as may be defined in the employee’s employment contract but cannot be less the sum of basic salary, housing allowance and transport allowance.
National Housing Fund: Nigerian employees earning a basic salary of NGN3,000 or more per year must contribute 2.5% of their basic salary to the National Housing Fund.
Employee Compensation Scheme: The Employee Compensation Scheme (ECS) is designed to provide adequate compensation for all employees or their dependents for any death, injury, disease, or disability arising out of or in the course of employment. Under the ECS, employers are required to remit monthly to the National Social Insurance Trust Fund 1% of the employer’s total monthly payroll as ECS contributions. This guarantees the registration of the employees for the benefits of the scheme. The contribution is mandatory for employers.
Industrial Training Fund: Employers with five or more employees are required to contribute 1% of their total payroll costs to the Industrial Training Fund (ITF). Employers with less than five employees but with a turnover of NGN50 million (approximately USD138,000) and above are also required to make the above contribution to the ITF. The term “employee” includes temporary employees who work for periods of not less than three months. The ITF may refund up to 50% of the amount contributed by an employer if the employer has engaged in approved training for its employees.
Employer Payroll Tax
Tax Rate Contribution
1% Industrial Training Fund (For employers having five or more employees, or less than 5 employees but has a turnover of 50 million NGN above)
1% National Social Insurance Trust Fund
Employee Payroll Tax
Tax Rate Contribution
2.5% National Housing Fund (For employees earning a minimum of 3,000 NGN per annum)
Allowable deductions are expenses incurred wholly, exclusively, necessarily, and reasonably in the production of taxable income
Employment Deductions: NHF contributions, National Health Insurance Scheme contributions, life assurance premiums, national pension scheme contributions, and gratuities are deductible. Mortgage or other loan interest relating to owner-occupied accommodations is deductible from employment compensation.
Personal Deductions: Donations made to research centers are deductible, subject to a maximum of 10% of an individual’s taxable income. Medical expenses and insurance premiums are deductible. Relief for life insurance premiums for the taxpayer and the taxpayer’s spouse is restricted to the actual premium paid to an insurance company by the individual during the year preceding the year of assessment.
Personal Allowance: As a result of the consolidated relief allowance of at least 21% of gross income, the top marginal tax rate is 18.96% for income above NGN 20 million as only 79% of income is taxed at 24%; however, for income below NGN 20 million, the marginal rate is 19.2%.
Business Deductions: Examples include: – Interest on money borrowed for business purposes, rent and premium payable on land or buildings occupied for the purpose of acquiring the income, repairs and maintenance expenses for premises, plant, or machinery used in generating income, bad debts, subscriptions, provided they relate to the business or profession.
The standard VAT rate in Nigeria is 7.5% (raised from 5% on 1st February 2020). Only a limited number of supplies are nil-rated meaning any VAT suffered may be re-credited to the taxpayer. Nil-rated items include non-oil exports, goods and services purchased by diplomats, and goods and services purchased for use in humanitarian donor funded projects. Exempt items include plants and machinery for use in export processing zones or free trade zones, basic food items, medical products and services, pharmaceutical products, books, and educational materials, and exported services.
For Residents – 10%
For Non-Residents – 10% (Can Be Reduced To 7.5%): The WHT rate on non-residents is reduced to 7.5% where the recipient is resident in a country that has concluded a tax treaty with Nigeria. The WHT rate for non-treaty countries is 10%. There is no distinction between the WHT rates for resident companies or individuals and non-resident companies or individuals.
Certain payments to domestic companies/individuals and non-resident companies/investors are subject to WHT at the following rates:
Types of Payment WHT for Companies (%) WHT for Individuals (%)
Dividends, interest, and rents 10 10
Directors’ fees N/A 10
Hire of equipment 10 10
Royalties 10 5
Commission, consultancy, technical, service fees 10 5
Management fees 10 5
Construction (roads, buildings, and bridges) 2.5 5
Contracts other than sales in business 5 5
The period for filing WHT is 21 days after the duty to deduct arose for deductions from companies.
The penalty for failure to deduct or remit tax is 10% of the amount not deducted/remitted.
Note that companies are required to submit, in electronic form, a schedule of all their suppliers for the month showing the tax identification number (TIN), address of the suppliers, the nature of the transaction, WHT deducted, and invoice number.