How does payroll work in Nigeria?
Nigerian payroll runs monthly. The employer withholds PAYE and remits it to the employee's state revenue service, pays 10% pension to a licensed PFA on top of the employee's 8%, pays 1% NSITF on gross, and pays ITF where the payroll or headcount threshold is met.
- Cycle
- Monthly
- Employer pension
- 10% (employee 8%)
- NSITF
- 1% of gross
- PAYE remitted to
- State revenue service
03What comes out and who it goes to
Nigerian payroll has three destinations: the state revenue service for PAYE, a licensed Pension Fund Administrator for pension, and federal agencies for NSITF and ITF. Each has its own remittance rhythm and penalty regime for lateness.
- PAYE — withheld from the employee, remitted monthly to the state revenue service of their residence
- Pension — 10% employer plus 8% employee of qualifying emoluments, to the employee's chosen PFA
- NSITF — 1% of gross, employer-borne, to the employee compensation scheme
- ITF — 1% of annual payroll where the employer exceeds the ₦50m payroll or 5-employee threshold
04Payslips and records
Employees should receive an itemised payslip each cycle showing gross, PAYE, pension and net. Keep remittance evidence — PAYE receipts and PFA schedules are what a tax audit asks for, not your internal spreadsheet.
05Running it from abroad
A foreign company cannot remit PAYE or register with a PFA without a Nigerian entity. That is the practical reason most first hires in Nigeria go through an Employer of Record, which already holds the registrations.
Frequently asked
Which state do I remit PAYE to?+
The revenue service of the state where the employee is resident, not where your office is. Remote hires in different states mean different remittance destinations.
Can I pay a Nigerian employee in USD?+
Salaries are normally contracted and paid in naira. An EOR invoices you in USD and pays the employee in naira on the local cycle, absorbing the FX operation.
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