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Find out how Remote can guide you through the complexities of managing cross-border hiring, payroll, taxes, and compliance.

Payroll services in Nigeria

Nigeria has a growing economy with key industries in oil and gas, agriculture, and telecommunications. With specific labor laws and tax regulations, employers in Nigeria must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Nigeria

Employers in Nigeria must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

  • Minimum wage: Nigeria’s minimum wage is NGN 30,000 per month.
  • Payroll frequency: Salaries are generally paid monthly.
  • Standard working hours: The normal workweek in Nigeria is 40 hours, typically spread over five days.
  • Overtime: Employees are entitled to additional pay for overtime work, calculated at 150% of the regular wage for extra hours and 200% for work on public holidays.

Taxation and social security contributions

  • Personal income tax: Nigeria has a progressive income tax system with rates ranging from 7% to 24% depending on income levels.
  • Employer contributions:
    • Pension Fund: 10% of the gross salary.
    • National Housing Fund (NHF): 2.5% of the gross salary.
  • Employee contributions:
    • Pension Fund: 8% of the gross salary.
    • National Housing Fund (NHF): 2.5% of the gross salary (optional for employees earning below a threshold).
  • Corporate tax: The corporate income tax rate in Nigeria is 30% for large companies and 20% for small businesses.
  • Tax reporting: Employers must file payroll taxes and contributions with the Federal Inland Revenue Service (FIRS) and the National Pension Commission (PenCom) regularly.

Payroll compliance in Nigeria

  • Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
  • Payroll deductions: Employers must ensure accurate deductions for social security, pension, and income tax.
  • Employers must stay updated on changes to Nigeria’s labor laws and tax regulations to avoid penalties.

Run payroll in Nigeria with Remote

Managing payroll in Nigeria requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.