Did You Know? Having Remote Employees May Create Unexpected Tax Exposure

Introduction

Remote work has changed where businesses find talent. Less obvious is that it may also change where businesses become taxable. For many businesses, approving a remote working arrangement is largely an operational decision, with considerations often centred on productivity, collaboration, data security and employee wellbeing. Yet where an employee performs their duties can also have legal and tax implications that are easily overlooked.

Under Nigerian law, a remote employee does not automatically create tax exposure for an employer. Depending on the facts, however, such arrangements may give rise to payroll obligations, corporate income tax implications, or even a Permanent Establishment (PE). As flexible working continues to reshape the workplace, understanding these risks is becoming an important aspect of business governance rather than merely tax compliance.