NIGERIA

Entering Nigeria in 2026: what the naira reset and new tax laws mean for Canadian service firms

The naira is stronger, rates are falling and a Canada–Nigeria tax treaty has been in force since 1999. But setting up locally still means a Nigerian company, a ₦100 million capital bar for foreign-owned firms and a brand-new tax code.

Citi Sighs4 MIN22 Oct

Aerial view of the Lekki–Ikoyi Link Bridge in Lagos, Nigeria, with the city around it

The Lekki–Ikoyi Link Bridge, Lagos. Photo: Tunde Buremo / Unsplash

By the Citi Sighs Intelligence Desk — Toronto, October 22, 2026

TORONTO — Three years after Nigeria let the naira float, the reforms are starting to pay off for foreign businesses. The central bank cut its policy rate from 26.5% to 23% in September, its largest cut since 2006. Inflation fell to 14.63% in September. And the naira is about 10% stronger against the dollar than a year ago.

For a Canadian consulting, software or professional services firm, that makes Nigeria easier to price and easier to get paid from. It does not make it simpler to enter.

From devaluation to a steadier naira

In June 2023 Nigeria merged its exchange-rate windows into one market-determined rate. The official rate moved from ₦473 to ₦664 per dollar in a day and kept falling through 2024. The central bank then set December 1, 2024 for an electronic matching system to become the official market.

The trend has since turned. The official rate was about ₦1,468 per dollar in October 2025 and about ₦1,329 on October 9, 2026, with the street rate close behind. In June 2026 the IMF said the parallel-market premium had stayed below 5%, and gross reserves rose to US$46 billion in 2025.

One caution on inflation: Nigeria rebased its consumer price index in 2025, so readings before and after January 2025 are not directly comparable.

Getting money out

The worst of the dollar shortage is over. The central bank settled about US$7 billion of verified foreign-exchange claims that had built up, and in March 2026 it lifted 2024 limits on oil companies repatriating export earnings.

For a firm that invests capital in a Nigerian subsidiary, the key document is the Certificate of Capital Importation, obtained through the authorised dealer bank that receives the funds. It is the basis for later sending capital, profits and dividends home, and the central bank requires it to repatriate or divest. Capital brought in without one is hard to take out.

The entry requirements

A foreign company that wants to do business in Nigeria must, with limited exceptions, incorporate a Nigerian company with the Corporate Affairs Commission and register with the Nigerian Investment Promotion Commission before operating.

The hurdle that surprises most founders is capital. A company with foreign shareholders needs ₦100 million in paid-up capital to obtain the business permit that foreign participation requires. At October’s official rate that is roughly US$75,000. The company registry briefly announced the same minimum in December 2023 and withdrew the notice days later, but the permit requirement stands, so in practice the amount applies.

Hiring foreign staff needs an expatriate quota approval as well; the business permit and quota together take roughly three to seven weeks.

A new tax code from January 2026

Nigeria rewrote its tax system in 2025. Four laws, including the Nigeria Tax Act, took effect on January 1, 2026, and a new Nigeria Revenue Service was established.

For a Canadian firm billing a Nigerian client from abroad, three points stand out:

Fees for professional, management, technical or consulting services paid to a non-resident company carry a 10% withholding tax, as a final tax.
Service income paid from Nigeria is taxable there even if the work is done abroad.
Non-residents selling digital services must register for Nigeria’s 7.5% VAT; if they don’t, the Nigerian customer must withhold it.

A local subsidiary pays 30% company income tax plus a 4% development levy. Small companies are exempt, but professional services firms do not qualify for that exemption.

Unlike Ghana, Nigeria has a tax treaty with Canada, in force since November 1999, and the new law gives treaties precedence. Some online guides say otherwise; they are wrong. Exactly how the treaty applies to a given service contract is a question for a tax adviser.

The case for and against

The case for Nigeria is momentum. The currency has stabilised, rates are falling and repatriation has become easier. Canada–Nigeria merchandise trade was already C$2.2 billion in 2022, and the two countries have a tax treaty.

The case against is cost and unpredictability. The ₦100 million capital bar is a real commitment for a small firm. Rules change quickly and sometimes reverse, as the capital notice and the oil repatriation limits both did. The IMF also flags 63% poverty and security challenges as major risks, and Nigeria ranked fourth among Africa’s big four startup markets for venture funding in 2025, according to the tracker Africa: The Big Deal.

Citi Sighs analysis — For most Canadian service firms, the sensible first step into Nigeria is selling cross-border, not setting up locally. Billing from Canada avoids the ₦100 million capital bar while the 10% withholding tax and the tax treaty keep the cost manageable. Set up a local company once revenue justifies it, and when you do, make sure every dollar of capital you send arrives with a Certificate of Capital Importation, or getting it back out will be hard.

What we could not verify

We could not confirm whether the ₦100 million minimum is also a company-registry rule or only a business-permit rule, the treaty-reduced withholding rate for Canadian service fees, or how long service-fee transfers to a foreign parent take in practice in 2026. Full-year 2025 startup funding figures for Nigeria also differ between data providers.

Disclosure: Citi Sighs has no commercial relationship with any company or institution named in this article. This article is general information, not tax, legal or investment advice.