If you're running a dropshipping business or importing goods from China to resell in Nigeria, you're part of a growing community of ecommerce entrepreneurs. The big question everyone asks: "Do I need to pay tax on this?" The short answer is yes. But the good news? Many of you might owe ₦0 thanks to the ₦800,000 tax-free threshold.

This comprehensive guide covers everything you need to know about taxes for both mini-importers (people buying from Alibaba, 1688, JD through procurement agents) and dropshippers (people selling products without holding inventory). Both business models fall under the same tax rules, and we'll show you exactly how to handle your obligations.

Do Ecommerce Sellers Pay Tax in Nigeria?

Yes, ecommerce sellers pay tax in Nigeria. Whether you're buying phone cases from Alibaba and reselling on WhatsApp, or dropshipping fashion items from a local supplier, your profits are taxable income under Nigerian law.

But here's what most people don't understand: you're taxed on PROFIT, not total sales.

Key distinction: If you sold ₦2,000,000 worth of products but paid ₦1,500,000 to suppliers and spent ₦300,000 on expenses, your taxable income is only ₦200,000, not ₦2,000,000. Big difference!

Under the Nigeria Tax Act 2025 (effective January 1, 2026), if your total taxable income is ₦800,000 or less, you owe ₦0 in personal income tax. This means many small importers and dropshippers may not owe any tax at all.

Important: Even if you owe ₦0, you MUST still file your tax return by March 31. Not filing attracts penalties of ₦50,000 for the first month and ₦25,000 for each month after, plus 10% interest on any unpaid amount.

Business Name vs Limited Company: The Real Difference

This is where many people get confused. Let's clear it up once and for all.

Business Name Registration

When you register a Business Name with CAC (Corporate Affairs Commission), you're simply registering a trading identity. Common examples:

• "Bella's Fashion House"
• "ChiChi Gadgets"
• "EazyBuy NG"

A Business Name is NOT a company. It's still you, the individual, doing business under a different name. This means:

• You pay Personal Income Tax (PIT)
• Tax is filed with your State Internal Revenue Service (SIRS)
• Your business income is combined with any other income you have
• The ₦800,000 tax-free threshold applies to you

Limited Company (Ltd or Plc)

A Limited Company is a completely separate legal entity. It has its own identity, separate from you. This means:

• The company pays Company Income Tax (CIT)
• Tax is filed with the Federal Inland Revenue Service (FIRS)
• Different tax rates and rules apply
• More complex accounting requirements

For most side hustlers: If you registered a Business Name (not "Limited" or "Ltd" in the name), you're taxed as an individual. This is actually simpler and often more tax-efficient for smaller operations.

What if my Business Name registration expired?

Business Name registrations in Nigeria last for 2 years. If yours has lapsed, don't panic. You can still file your taxes normally. Tax filing is based on your income, not your CAC registration status. Of course, you should renew your registration, but an expired registration doesn't exempt you from filing.

How to Calculate Your Taxable Income (Profit, Not Revenue)

This is the most important section. Many people think they're taxed on everything customers pay them. Wrong!

The formula is simple:

Taxable Profit = Sales Revenue - Cost of Goods Sold - Business Expenses

Example 1: Mini-Importer

Amaka imports phone accessories from China and sells on WhatsApp:

Description	Amount
Total sales to customers	₦2,000,000
Paid to Chinese supplier	₦1,200,000
Shipping and customs	₦150,000
Procurement agent fees	₦50,000
Facebook ads	₦80,000
Data and internet	₦36,000
Packaging materials	₦15,000
Bank transfer fees	₦19,000
Total Expenses	₦1,550,000
Taxable Profit	₦450,000

Result: Amaka's taxable profit is ₦450,000, which is below the ₦800,000 threshold. She owes ₦0 in tax but must still file.

Example 2: Dropshipper

Tunde runs a dropshipping business selling fashion items. He doesn't hold inventory. When customers order, he buys from his supplier who ships directly.

Description	Amount
Total sales (customer payments)	₦1,500,000
Paid to vendors for goods	₦1,050,000
Instagram ads	₦120,000
WhatsApp Business API	₦36,000
Internet and data	₦48,000
Bank charges	₦12,000
Total Expenses	₦1,266,000
Taxable Profit	₦234,000

Result: Tunde's taxable profit is ₦234,000. Also below ₦800,000, so he owes ₦0 in tax.

The key takeaway: Track everything you spend on your business. Every expense you can legitimately claim reduces your taxable profit.

How to Use KeepAm for Your Ecommerce Business

KeepAm already has all the categories you need to track your importer or dropshipper business. Here's exactly how to use them.

Tracking Your Income

For all your sales revenue, use the "Business" category when adding income entries.

• Log each sale individually, or
• Log weekly or monthly totals
• Use the description field to add details like "50 phone cases sold" or "January WhatsApp sales"

Tracking Your Expenses

Here's how to map your ecommerce expenses to KeepAm's existing categories:

Your Expense	KeepAm Category	Example
Goods purchased from supplier	Equipment	₦35,000 to AliExpress vendor
Shipping and courier fees	Transportation	₦15,000 to GIG Logistics
Import duties and customs	Professional Services	₦20,000 customs clearing
Procurement agent fees	Professional Services	₦5,000 sourcing agent
Facebook and Instagram ads	Marketing	₦10,000 ad spend
WhatsApp Business API	Software/Subscriptions	₦3,000 monthly
Bank transfer fees	Bank Charges	₦500 per transfer
Packaging materials	Office Supplies	₦2,000 for boxes and tape
Internet and data	Internet/Data	₦10,000 monthly

Pro tip: Use the description field to add detail. Instead of just selecting "Equipment," write "Equipment, 50 phone cases from supplier" in the description. This makes your records clearer for tax purposes.

Combining Multiple Income Sources

Many importers and dropshippers do this as a side hustle while working a main job. If that's you, both income sources are combined for tax purposes.

Example: Salary Plus Dropshipping

Ngozi works in an office and earns ₦3,000,000 per year. She also runs a dropshipping business on the side that made ₦600,000 profit this year.

Income Source	Amount
Salary (employer already deducts PAYE)	₦3,000,000
Dropshipping profit	₦600,000
Total Taxable Income	₦3,600,000

Her total taxable income is ₦3,600,000. Tax will be calculated on this full amount (minus allowable deductions like pension and rent relief).

Good news: If your employer already deducts PAYE from your salary, you're partly covered. You'll only need to pay additional tax on the dropshipping income, taking into account what's already been paid.

Deductible Expenses for Ecommerce Sellers

Here's a comprehensive list of what you can claim as an importer or dropshipper.

Fully Deductible (100%)

• Cost of goods sold (what you paid suppliers for inventory you actually sold)
• International shipping fees (air freight, sea freight)
• Local delivery costs (GIG, DHL, courier services)
• Customs and import duties
• Procurement and sourcing agent fees
• Platform fees (Jumia seller fees, Paystack charges, Flutterwave fees)
• Advertising costs (Facebook ads, Instagram promotions, Google ads)
• Packaging materials (boxes, tape, bubble wrap, branded bags)
• Business insurance

Partially Deductible (50% default)

These expenses are shared between business and personal use:

• Internet and data (if also used personally)
• Phone expenses (if same phone for business and personal)
• Transportation (to meet suppliers, customers, or pick up shipments)

Not Deductible

• Personal purchases
• Products you kept for yourself or gave to family
• Fines or penalties
• Goods bought but not yet sold (this becomes an expense when you sell them)

Record Keeping for Ecommerce

Good records are essential. If FIRS ever audits you, you'll need proof of your income and expenses.

What to Save

• WhatsApp conversations showing customer orders and payments
• Bank statements showing transfers from customers and payments to suppliers
• Shipping receipts and waybills
• Customs clearance documents
• Supplier invoices (Alibaba order confirmations, 1688 receipts)
• Advertising dashboard screenshots showing ad spend
• Payment gateway statements (Paystack, Flutterwave)

How Long to Keep Records

FIRS can audit your tax returns up to 6 years back. Keep all business records for at least 6 years. Store them in both physical folders and digital backups (Google Drive, iCloud, or similar).

Easy system: Create a folder on your phone called "Business Records 2026." Screenshot or photograph every receipt, invoice, and payment confirmation. At the end of each month, back it up to cloud storage.

The ₦800,000 Threshold Explained

Under the Nigeria Tax Act 2025, the first ₦800,000 of taxable income is tax-free. This is great news for many small ecommerce sellers.

How It Works

• Calculate your total taxable income (all income minus all deductions)
• If the result is ₦800,000 or less, you owe ₦0 in personal income tax
• If the result is above ₦800,000, tax only applies to the amount above the threshold

Example

Emeka's dropshipping business made ₦650,000 profit for the year. He has no other income.

• Taxable income: ₦650,000
• Tax-free threshold: ₦800,000
• Tax owed: ₦0

Critical reminder: Even though Emeka owes ₦0, he MUST file a tax return by March 31. Filing is mandatory for everyone with taxable income, regardless of whether you owe tax. Failure to file results in penalties starting at ₦50,000.

Which Category to Select in KeepAm

When you sign up for KeepAm, you'll be asked about your income type. Here's what to select:

During Onboarding

• If you have a Business Name registration (not a Limited Company): Select "Self-Employed / Freelancer"
• If you have a Limited Company: Select "Small Business Owner"
• If you have a salary job plus a side hustle: Select "Multiple sources" or the option that best describes your main income

For Income Entries

Use the "Business" category for all your sales revenue from importing or dropshipping.

For Expense Entries

Use the mapping table shown earlier in this guide. The key categories are:

• Equipment for goods purchased from suppliers
• Transportation for shipping costs
• Professional Services for customs, agents, and clearing
• Marketing for ads

Frequently Asked Questions

The Bottom Line

Running an import or dropshipping business in Nigeria means you have tax obligations, but it doesn't have to be complicated. The key points to remember:

1. You're taxed on profit, not revenue. Every legitimate business expense reduces your tax.
2. Business Name holders pay Personal Income Tax, not Company Tax.
3. The ₦800,000 threshold means many small sellers owe ₦0.
4. Filing is mandatory by March 31, even if you owe nothing.
5. Keep good records for at least 6 years.

KeepAm makes all of this simple. Track your income, log your expenses, and when tax season comes, you'll have everything organized and ready.

Next steps:

• Calculate your potential tax using our free tool
• Create a free account and start tracking your business
• Read about more deductions you might be missing