Nigeria

Individual - Deductions

Last reviewed - 17 July 2020

Deductions for tax purposes are granted if the expenses meet the criteria for allowable deductions. Allowable deductions are expenses incurred wholly, exclusively, necessarily, and reasonably in the production of taxable income

Employment expenses

NHF contributions, National Health Insurance Scheme contributions, life assurance premiums, national pension scheme contributions, and gratuities are deductible.

Mortgage or other loan interest relating to owner-occupied accommodations is deductible from employment compensation.

Personal deductions

Charitable contributions

Donations made to research centres are deductible, subject to a maximum of 10% of an individual's taxable income.

Healthcare expenses

Medical expenses and insurance premiums are deductible.

Life insurance premiums

Relief for life insurance premiums for the taxpayer and the taxpayer's spouse is restricted to the actual premium paid to an insurance company by the individual during the year preceding the year of assessment.

Standard deductions

There is no blanket or standard deduction for expenses.

Personal allowances

Allowance Limit
Consolidated relief allowance Higher of NGN 200,000 or 1% of gross income plus 20% of gross income *

As a result of the consolidated relief allowance of at least 21% of gross income, the top marginal tax rate is 18.96% for income above NGN 20 million as only 79% of income is taxed at 24%; however, for income below NGN 20 million, the marginal rate is 19.2%.

* 'Gross income' means wages, salaries, allowances (including benefits in kind), gratuities, superannuation, and any other income derived solely by reason of employment.

Business deductions

Examples of deductible business expenses include:

  • Interest on money borrowed for business purposes.
  • Rent and premium payable on land or buildings occupied for the purpose of acquiring the income.
  • Repairs and maintenance expenses for premises, plant, or machinery used in generating income.
  • Bad debts.
  • Subscriptions, provided they relate to the business or profession.