A practical guide to payroll compliance in Nigeria

PAYE is personal income tax withheld from employees' pay. As the employer, you deduct it from each employee's salary and remit it to the relevant State Internal Revenue Service, usually monthly.

Nigerian personal income tax is progressive — higher earnings are taxed at higher bands, after statutory reliefs and allowances. The bands and reliefs are set by law and can change, so calculate against current rules.

Under the Pension Reform Act, qualifying employers must operate a contributory pension scheme. Both the employer and the employee contribute a percentage of the employee's qualifying emoluments into the employee's Retirement Savings Account with a Pension Fund Administrator.

Confirm the current minimum contribution rates and which employers are in scope, as thresholds for small employers have specific rules.

The National Housing Fund is a contribution that supports access to housing finance. Where it applies, a percentage of the employee's basic salary is deducted and remitted.

NSITF administers the Employee Compensation Scheme, which provides cover for work-related injury or death. This is typically an employer contribution based on payroll, not deducted from employees.

Qualifying employers contribute to the Industrial Training Fund, a training levy assessed on annual payroll, with reimbursement available for approved training. Whether you are in scope depends on employee count and turnover thresholds.

Keep accurate, auditable payroll records and issue payslips so employees can see their gross pay, deductions, and net pay. Good records make remittances, audits, and disputes far easier to handle.

• Manual spreadsheet errors that compound month over month
• Missed or late statutory remittances
• No clear audit trail of who changed what and when
• Payslips that don't reconcile with what was actually paid

A payroll system that understands Nigerian statutory items calculates draft figures for review, keeps a clean record of every run, issues consistent payslips, and logs changes — so compliance becomes a routine you can trust rather than a monthly scramble.