Establishing and running payroll in Nigeria
Nigeria’s fast-growing population, well-connected West African location, and booming business culture all contribute to it being a fantastic place to build and expand a business. The country is brimming with opportunities for any organization willing to take the plunge.
If you are planning a Nigerian expansion, one of your first steps will be hiring a local workforce. To do this you will generally need a legal entity in the country and will need to establish an in-country payroll and employment infrastructure. This can be a long and difficult process in many cases, taking several months to complete and causing delays.
At Horizons, we specialize in helping organizations spanning all industries expand internationally, including into Nigeria. We can handle your Nigeria payroll outsourcing setup and management, even if you don’t have a legal entity in Nigeria.
Why choose the Horizons payroll solution?
If you have an entity
If your organization has already registered an official entity in Nigeria, then you can outsource your payroll setup and management to us to get expert support and to fast-track your operations.
This level of outsourcing is perfect for larger organizations that are looking to expand into Nigeria long term.
If you don’t have an entity
For organizations that have not already established an entity in Nigeria, we offer our standard Nigeria payroll outsourcing services with the added use of our Nigerian subsidiary. Our subsidiary will act as employer of record for your local workforce, meaning you won’t have to go through the long and cumbersome process of registering a legal entity in Nigeria.
This service provides a low-risk, flexible, and scalable option for organizations interested in expanding into Nigeria.
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Nigeria payroll guide
Taxation and withholdings requirements in Nigeria
Employers and workers in Nigeria are required to pay a percentage of salaries into pension funds. Employers must pay a minimum of 10%, and workers must contribute a minimum of 8%. Most workers will also need to pay 2.5% to the National Housing Fund.
In Nigeria, incomes are tax progressively, with high earners paying a higher percentage in taxes The income tax rates range from 7% to 24%.
For most companies in Nigeria, corporation tax is 30%.
|
Pension and disability
|
10%
|
|
Health Insurance
|
10%
|
| Accident |
1%
|
|
Total Employer Cost
|
21% |
|
Pension and disability
|
8%
|
|
Health Insurance
|
5%
|
|
Housing Fund
|
2.5%
|
| Total Employee Cost | 15.5% |
|
First NGN 300,000
|
7%
|
|
Next NGN 300,000
|
11%
|
|
Next NGN 500,000
|
15%
|
|
Next NGN 500,000
|
19%
|
|
Next NGN 1.6 million
|
21%
|
|
Above NGN 3.2 million
|
24%
|
Entitlements and terminations in Nigeria
Employers and workers are both able to end contracts of employment at any time in Nigeria. This is a similar system to the ‘at-will employment’ regulations in the USA. We always recommend providing a notice period when terminating employees, however.
Employees are not legally entitled to severance payments in Nigeria.
How to establish Nigeria payroll outsourcing
In most cases, a foreign organization looking to establish a payroll in Nigeria will need to register an official entity within the country. This can take longer than expected and requires you to closely follow the country’s complex employment regulations.
Another option is to outsource your payroll setup and management to Horizons. We can offer the use of our Nigerian subsidiary to act as employer of record for your employees in Nigeria, so you can avoid the complex setup and management process, and can benefit from our solutions even if you don’t have a legal entity in Nigeria. Additionally, we can set up and run your payroll, HR, compliance, and any other associated work, allowing you to work on successfully expanding your businesses in Nigeria.
Manage payroll in Nigeria
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
