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Tax guidelines and regulations for large money transfers into Nigeria

Avoid landing in hot water with the IRS by reporting your transfer.



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Getting a large sum of money into Nigeria shouldn’t come with many tax-related issues. Your recipient likely won’t need to file anything, and all you have to do is get the right forms into the IRS at the right time.

How Nigeria regulates large remittances

Your transfer to Nigeria likely won’t be taxed on the recipient’s end unless it qualifies as a trade. While there’s no formal definition of what constitutes a trade, it tends to fall along the lines of payment for goods or services rendered — even if it’s a one-off transaction.

Transfers that fall under the trade or business transaction categories are regulated by the Nigerian Personal Income Tax Act, also known as PITA.

Required forms

The forms required to file income that falls under PITA vary based on the state where your recipient lives. They’ll need to check with their local State Board of Internal Revenue Services to find out which form applies.

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What are the penalties in Nigeria if my recipient fails to file?

The transfers that constitute trade or business transactions need to be filed as income. A 10% penalty on the amount owed, plus interest is due if the recipient fails to file with their State Board of Internal Revenue Services.

Do I have to report large remittances out of the US?

The short answer is yes, you probably do. Three likely scenarios exist that require you to report the transfer to the IRS:

  • Foreign Bank and Financial Accounts (FBAR).You have a foreign account that has a value over $10,000 in the past year.
  • Gift and Generation-Skipping Transfer Tax Return. You’ve been quite generous and gifted more than $17,000 in the past year.
  • Currency transaction reports. Your business sent over $10,000 in the past year in payments.

Sending a lot of money out of the country? Know what the IRS expects of you.

How much money can I send to Nigeria?

Nigeria doesn’t cap incoming foreign transfers. The Central Bank of Nigeria does impose a limit on outgoing transfers of $2,000.

That isn’t to say you’ll be able to send as much as you like all at once. While there aren’t legal limits, most transfer service providers set their own. To avoid limits, you’ll need to find a provider without maximums like Xe.

How can my recipient in Nigeria get the money?

Money can be directly deposited into a bank account under the recipient’s name or mobile wallet.

It can also be delivered via cash pickup. Outside of major cities, location may be an issue. Be sure to check the transfer service’s delivery area before hitting the cash option.

You can find out more about the best way to send money to Nigeria by checking out our guide.

Bottom line

Nigerian laws around taxing foreign transfers are fairly straightforward, and your recipient likely won’t have to worry about reporting it if you’re sending a gift. That doesn’t mean you’re off the hook though. Make sure you file the appropriate forms and report the transfer to the IRS if necessary.

Transfer providers come in all shapes and sizes. To find one that’s best for you, compare international money transfer services before you send.

Frequently asked questions

Can I avoid transferring money by taking cash with me to Nigeria?
Yes. You’ll still have to report it by filling out and submitting FinCEN form 105.

How can I avoid getting hassled by the IRS?
Submit any of the required forms in a timely fashion and the IRS shouldn’t give you any trouble.

What are the penalties for failing to report transfers to the IRS?
Penalties vary depending on which report you should have filed.

  • FBAR. You could be charged a fee of up to 50% of the value of the account at the time of the violation or $100,000, whichever is greater. Fees may be less if you can prove your violation wasn’t willful.
  • Gift and Generation-Skipping Transfer Tax Return. Interest is charged on any taxes not paid, starting from the date they were due.
  • Currency transaction reports. A wide range of fees can be assessed based on the type of violation.

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