Plan contractor hiring in Nigeria

Engage a Nigerian independent contractor for an agreed service fee, identifying whether the supplier is the individual or an incorporated company. For an individual resident in Nigeria, income remains taxable there even when the customer and the account receiving the money are abroad. The ordinary resident individual's income tax is administered by their State or Federal Capital Territory tax authority. That distinction matters when an onboarding team asks who issued a tax record: a state-issued document can be the right one. Collect the supplier's legal name, trading name where used, Tax ID and service description before the first invoice. These details connect the contract to the person responsible for reporting the income.

Sources: National Industrial Court, Anawoye v Smart Mark Limited, Nigeria Tax Act 2025, Nigeria Tax Administration Act 2025

Tax Clearance Certificate

A Tax Clearance Certificate shows the contractor's income-tax record for the preceding three assessment years. It records income or profits, tax payable, tax paid and any balance outstanding, or states that no tax is due. The contractor requests it from the relevant tax authority, which must issue it or give reasons for denial within two weeks of the request. Use it when your supplier checks call for evidence of tax standing. Its statutory collection requirements concern specified government and commercial-bank dealings, including licence applications and government contracts. For an ordinary overseas service purchase, keep any request proportionate: the certificate describes prior tax years and does not certify the VAT on a particular invoice.

Issued by: The relevant tax authority, to the contractor on request.

Timing: Requested by the contractor when needed; the statutory response period is two weeks.

Sources: Nigeria Tax Administration Act 2025

A qualifying exported service is charged at 0% Nigerian VAT. The definition covers a service supplied to a nonresident person outside Nigeria, regardless of where the contractor performs the work, and excludes services rendered to that person's Nigerian permanent establishment. For this engagement, identify the overseas business receiving the service and describe the deliverable clearly. Working from Nigeria alone does not prevent export treatment. A service connected with Nigerian immovable property has a separate local supply rule and needs its own tax check. Keep the customer identity and service scope with the invoice so a zero-rated fee has a clear commercial explanation when finance reviews it.

Sources: Nigeria Tax Act 2025

What an invoice has to show

• Supplier Tax ID and applicable incorporation or business-registration number

  A VAT invoice carries the supplier's Tax ID as well as the incorporation or business-registration number where applicable. These are separate identifiers: a Corporate Affairs Commission number identifies the registration, while the Tax ID identifies the taxpayer. Check them against the exact supplier record used for the contract. The same statutory list requires the supplier's name and address, purchaser's name, invoice number, date of supply, gross transaction amount, VAT and rate. Keep those ordinary details in one invoice check.

  Sources: Nigeria Tax Act 2025, Nigeria Tax Administration Act 2025

• Proprietor details on an invoice issued under a registered business name

  An individual using a registrable business name must disclose the proprietor behind it on invoices. The Companies and Allied Matters Act calls for present forenames or initials and surname, former names where applicable, nationality and the business-name registration number. A brand name in the header alone leaves that disclosure incomplete. For accounts payable, the useful result is a direct connection between the trading name and the person supplying the work. Check the proprietor details alongside the registration record at onboarding, then keep that identity consistent on later invoices. This requirement concerns an individual business-name supplier; a company is identified through its corporate records.

  Sources: Corporate Affairs Commission, Companies and Allied Matters Act 2020

• VAT invoice on supply, with sequential numbering and the applicable VAT rate

  A supplier subject to the VAT-invoice duty issues the invoice on supply even when payment has not yet arrived. The invoice uses sequential numbering and shows the VAT charged and its rate, which is 0% for a service that qualifies as an export. Accounts payable should therefore expect the tax document before settlement. Do not make payment a prerequisite for issuing it or ask for the VAT field to disappear simply because the rate is zero. Keep the supply date visible when checking the document, especially where an engagement spans more than one service period or a change in the tax rules.

  Sources: Nigeria Tax Act 2025

Applying the 2026 tax template to an older liability

The Nigeria Tax Act took effect on 1 January 2026, while liabilities for earlier periods remain governed by the repealed laws. The Federal Ministry of Finance's transition guidance preserves that distinction for assessments, audits, disputes and enforcement. A document arriving in 2026 can therefore concern an older liability. When correcting an invoice or resolving a historic tax query, retain the original service period and identify which transaction is being corrected before changing the tax description. Keep older supplier records accessible alongside the current Tax ID. A new identifier or a new accounts-payable template is not a reason to rewrite the tax history of the engagement.

Sources: Federal Ministry of Finance, 2026 tax transition guidelines announcement, FCT Internal Revenue Service, Nigerian Tax ID portal

Changing supplier onboarding without checking the e-invoicing notice

An electronic-invoicing direction under the Nigeria Tax Act is addressed to the taxable supplier. The Nigeria Revenue Service can require that supplier to adopt electronic invoices after giving at least 30 days' notice. If a contractor changes the invoice format, ask for the instructions that apply to them and agree how finance will receive the resulting document. Preserve the supplier identity, supply date and tax details through the format change. Have the contractor explain any customer information their issuing process needs before changing your supplier-onboarding requirements. Keep the contractor's issuing process and your own invoice-acceptance process clear when updating procurement instructions.

Sources: Nigeria Tax Act 2025

Describing a zero-rated export fee as tax-free personal income

Zero-rated VAT does not remove the resident contractor's income-tax reporting duty. Nigeria taxes a resident individual's income wherever it arises and whether or not it is brought into the country. The individual return includes income from every source and, for business or professional earnings, accounts supporting that income. A customer paying an overseas account should therefore preserve the same clear service description and payment reference it would use for any supplier invoice. Treat the agreed fee as business revenue in communications with the contractor. Their personal income-tax calculation belongs with their return, and a 0% VAT invoice does not turn the payment into a personal gift.

Sources: Nigeria Tax Act 2025, Nigeria Tax Administration Act 2025