Question 1

What exchange rate should I use for tax purposes?

Accepted Answer

For Nigerian tax purposes, you should use the CBN (Central Bank of Nigeria) official rate on the date the income was received. The parallel market rate is not acceptable for tax calculations.

Question 2

How is foreign income taxed in Nigeria?

Accepted Answer

Nigerian tax residents are taxed on worldwide income. Foreign income is converted to Naira using the CBN rate on the date of receipt and added to your total taxable income for the year.

Question 3

Do I need to report foreign income if tax was already withheld?

Accepted Answer

Yes, you must report all foreign income. However, you may be able to claim foreign tax credits for taxes already paid abroad, subject to double taxation agreement provisions.

Question 4

When should I convert foreign income to Naira?

Accepted Answer

Convert foreign income to Naira at the CBN rate on the date you received the payment. Keep records of the exchange rate used for each transaction.

Question 5

Is there a threshold for reporting foreign income?

Accepted Answer

No, all foreign income must be reported regardless of amount. The ₦800,000 tax-free threshold applies to your total income (local and foreign combined).

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