List of Income Exempted from Tax in Nigeria

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There are certain classes of incomes that are excluded from the taxable income base in Nigeria’s tax systems. The reasons for this exclusion vary, but it is important to state that these exemptions are the statutory exceptions to a general rule rather than the absence of taxation in such circumstances.

List of Income Exempted from Tax in Nigeria

This is a list of income exempted from tax in Nigeria:

  • The income of a person from a source of livelihood whereby the person earns is lesser than the National Minimum Wage.
  • Income earned by holders of bonds, and short-term securities of Federal, State, and Local Government bonds and supra-nationals.
  • Income earned from bonds issued by a corporate entity including, supra-nationals
  • Income earned from bonds issued by Federal, State, and Local Governments and their agencies.
  • Any compensation for loss of employment
  • The income of a foreign national from employment by any Government, organization, or agency for which there exists an arrangement between the foreign national and the Federation of State for technical assistance and the employment is solely in pursuit of the technical assistance arrangement.
  • The interest accruing to a person on a foreign currency domiciliary account.
  • Income earned from outside Nigeria by a temporary guest, lecturer, teacher, doctor, and so on, and brought into Nigeria provided such income is deposited in a domiciliary account of an authorized bank in Nigeria.
  • A sum received by way of death gratuities or as consolidated compositions for death or injuries.
  • Pension granted to any person according to any enactment or law for the time being in force.
  • Wound and disability pension granted to members of the armed forces or recognized national defense organizations or a person injured as a result of enemy action.
  • All consular fees on behalf of a foreign State, or by a consular officer of the foreign State, and all income by such consular officer provided that no business or trade was carried on by a consular officer.
  • Interest accruing to a person not resident in Nigeria on a loan charged on the public revenue of the Federation and raised in the United Kingdom.
  • Interest accruing to a person not resident in Nigeria, on interest on a bond issued by tur Government of the Federation to secure repayment of a loan raised from the International Bank of Reconstruction and Development.
  • Interest accruing to a person not resident in Nigeria, on any borrowed by the Government of the Federation or a State on terms which exemption of interest from tax in the hands of the non-resident has been established ab initio.
  • Interest accruing to a person not resident in Nigeria, on the consent of the Minister of Finance, on any monies borrowed outside Nigeria by a corporation established by law in Nigeria provided that terms exist ab initio to exempt such interest from tax in the hands of the person not resident in Nigeria.
  • Interest accruing to a person not resident in Nigeria, on deposits accounts, provided that such deposits transfer into the account are made entirely of foreign currencies and are through approved channels of the Government. However, a clause exists that after the depositor makes such transfer of deposits into an account in Nigeria, he does not become a non-resident.
  • Interest on any loan granted by a bank to a person engaged in agricultural trade; and the fabrication of any local plant and machinery.
  • The income of an American citizen for employment by the International Development Services as agents or the International Cooperation Administration.
  • An income in respect of which tax is remitted or exempted under the provisions of the Diplomatic Immunities and Privileges Act.
  • The income of a Local Government or government institution.
  • The income of any charitable, educational, or religious institution of a public character provided that such income Is not derived from a trade or business carried on by such institution.
  • The income of a trade union duly registered under the Trade Union Act provided that such income is not derived from a trade or business carried on by such trade union.
  • Dividends paid to a person by a company incorporated in Nigeria provided that the equity participation of the person in the company paying the dividends is either wholly paid for in foreign currency or by assets brought into Nigeria between January 1, 1987, and December 31, 1992.
  • Dividends paid to a person whom the divided are paid own not less than 10% of the equitable share capital of the company.
  • Income earned from abroad by an author, playwright, musician, athlete, artist and brought into Nigeria provided such income is brought in foreign currency and paid into a domiciliary account of an authorized bank in Nigeria.
  • Income earned from bonds issued by a corporate including supra-nationals.
  • Income earned by holders of the bonds and short-term securities vested in bonds issued by supranational bodies or bonds issued by the Federal, State, and Local Government and their agencies.
  • Income from dividends, interest, rent, royalties, fees, and commission earned from abroad and brought into Nigeria by a resident of Nigeria provided that such income is brought in convertible currency and paid into a domiciliary account of an approved bank in Nigeria.
  • The income of a duly registered cooperative society provided such income not being from any trade or business carried in by Society other than the activities solely carried out for and with the members.
  • Gratuities payable to a public officer by the Government of the Federation of State in respect of services rendered such individual under a contract of service that describes that such payments are regarded as gratuities in the contract.
  • The income of a statutory society provided that such income is not derived from trade carried on by such society.
  • Gratuities payable to an employee in the private sector in respect to services rendered by such individual and the contract of service of the employee with his employer clearly describes such payments as gratuities.
  • Emoluments payable from the United Kingdom funds to members of visiting forces, and emoluments payable to members of any civilian element and the income of any service organization accompanying the visiting forces, provided the beneficiary is not resident in Nigeria.






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