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Contractor of Record in Nigeria
Engage and pay Nigerian contractors through Aniday's partner entity in Nigeria
Under a Contractor of Record (COR) arrangement, Aniday's partner entity in Nigeria becomes the contracting party with your independent contractor. We run the classification check against the tests the National Industrial Court applies, sign a compliant contract for service, deduct and remit the withholding tax a Nigerian payer owes, collect the TIN and IP paperwork, and pay in naira — while your contractor keeps working directly with your team. You get the talent without a Nigerian entity, and without the misclassification risk sitting on your books.
Not sure whether the role is a contractor or an employee? Compare with Employer of Record in Nigeria for full-time hires — we tell you which one applies before you sign anything.
Nigeria's Employment Snapshot
What is a Contractor of Record in Nigeria?
The Nigerian Labour Act (Cap L1, LFN 2004) protects a "worker" engaged under a contract of service. Whether someone is really a worker is decided by the National Industrial Court using the common-law control test together with integration, economic reality, mutuality of obligation and exclusivity — looked at as a whole, not by the label on the contract. A Contractor of Record is a Nigerian company — Aniday's partner entity in Nigeria — that signs the contract for service with the contractor on your behalf, so the contractor is engaged by a local counterparty that deducts the right withholding tax, keeps the records the Nigeria Revenue Service and the state tax authority expect, and carries the classification liability.
COR is the right fit for genuinely independent work: project-based developers, part-time advisers, fractional roles and consultants who set their own hours and serve other clients. If the role is full-time, supervised and permanent, it is employment — use Employer of Record in Nigeria instead. We tell you which one applies before you sign anything.
Aniday in Nigeria — through our in-country partner entity
Our Address: Lagos, Nigeria
(contracting party, payer, WHT agent, compliance owner)
What Aniday's Contractor of Record covers in Nigeria
Everything between "we found the person" and "the person has been paid, on time, with the right paperwork".
Classification check against the NICN tests
Before onboarding we assess control, integration into your business, economic dependence, mutuality of obligation and exclusivity — the factors the National Industrial Court weighs together. If the answer is "worker", we say so and route the role to EOR.
A compliant contract for service, signed by our Nigerian partner entity
Scope, deliverables, fees, confidentiality, non-exclusivity and a written IP assignment — because under the Copyright Act 2022 copyright vests in the author, and section 30 requires an assignment to be in writing.
Invoicing and payment in NGN, one invoice to you
One invoice from Aniday to you in USD or SGD; NIP bank transfer in naira to the contractor on the agreed cycle. The contractor never has to manage a domiciliary account, a SWIFT wire or CBN documentation, because the payment is domestic.
Withholding tax deducted, remitted and credited
A Nigerian payer deducts 5% withholding tax on professional, consultancy, technical and management fees paid to a resident individual (10% for non-residents) under the Deduction of Tax at Source (Withholding) Regulations 2024. Our partner entity deducts it, remits it to the contractor's state tax authority and issues the credit note, so it counts against the contractor's own assessment.
Misclassification liability sits with Aniday
If a contractor engaged under our COR is later found to be a worker, the PAYE arrears, pension, NSITF and ITF contributions, notice and leave claims and NICN damages are our problem to resolve, not yours — that is what the fee pays for.
Convert to an employee when the role grows
When a contractor becomes full-time, we move them onto an employment contract under our Nigeria EOR with PAYE, pension, NSITF, NHF and statutory leave — same contact, same platform.
Contractor rules in Nigeria at a glance
The facts that decide whether a contractor engagement in Nigeria is clean. All figures are the current rules as of September 2026; sources are listed below the table.
| Topic | Nigeria rule |
|---|---|
| Employee vs contractor | The Labour Act (Cap L1, LFN 2004) covers a "worker" under a contract of service. No statutory contractor test: the National Industrial Court applies the common-law control test plus integration, economic reality, mutuality of obligation and exclusivity, holistically. A long, exclusive engagement with fixed periodic pay and no other clients points to employment whatever the contract says. |
| Who can be a contractor | Nigerian residents with a Tax Identification Number (TIN) — now issued centrally and required for business bank accounts and for the WHT small-transaction exemption. Foreign nationals need a work permit (CERPAC) tied to an employer; for them the route is EOR with a work visa. |
| Income tax | Nigeria Tax Act 2025, in force 1 January 2026. Resident individuals are taxed on worldwide income at 0% on the first ₦800,000, then 15% to ₦3m, 18% to ₦12m, 21% to ₦25m, 23% to ₦50m and 25% above ₦50m, with a rent relief of 20% of rent up to ₦500,000. Contractors file by direct assessment with the state internal revenue service where they live. Residence: 183 days in 12 months, a permanent home or significant ties. |
| Withholding on the payer | A Nigerian payer deducts WHT on professional, consultancy, technical and management fees at 5% for a resident individual (10% for a non-resident) under the Deduction of Tax at Source (Withholding) Regulations 2024, and remits it to the contractor's state tax authority. Small businesses need not deduct where a transaction is under ₦2 million and the vendor has a TIN. A foreign payer with no Nigerian presence does not deduct. Under COR our partner entity is the withholding agent. |
| VAT | 7.5% standard rate. Registration is turnover-based, and the 2025 reform acts relieve small businesses from charging VAT, so most individual contractors do not charge it; a registered contractor supplying our Nigerian entity charges 7.5%, which we recover as input VAT. Exported services are zero-rated. |
| Social security | No employer pension, NSITF, ITF or NHF contribution for contractors. Self-employed people can join the Contributory Pension Scheme voluntarily through PenCom's Micro Pension Plan and the National Health Insurance Authority on a voluntary basis. |
| Intellectual property | Copyright Act 2022 s.28: copyright vests in the author unless an agreement provides otherwise. Employer ownership applies only to government and international-organisation employment; a person who commissions a photograph, portrait or audiovisual work gets a licence for private use, not ownership. Section 30 requires assignments and exclusive licences to be in writing — Aniday's contract includes one that flows the rights to you. |
| Invoicing | No prescribed format for unregistered persons; VAT-registered contractors issue tax invoices with their TIN. The Nigeria Revenue Service's national e-invoicing platform (the Merchant Buyer Solution) became mandatory for large taxpayers with turnover of ₦5 billion or more on 31 July 2026, with medium and small taxpayers to follow in later phases. Under COR the contractor invoices our Nigerian entity in naira and we handle the e-invoice side when it reaches them. |
| Currency and payment | The naira floats under CBN management and foreign-currency access is controlled. Direct payment from abroad reaches a contractor's domiciliary account by SWIFT, or through Payoneer, Wise or Grey; PayPal receiving is restricted. Under COR the contractor is paid in naira by NIP transfer from our partner entity; you pay one Aniday invoice in USD or SGD. |
| Data protection | Nigeria Data Protection Act 2023, enforced by the Nigeria Data Protection Commission: lawful basis, purpose limitation, data-subject rights, breach notification and registration of data controllers of major importance. Aniday's partner entity is the data controller for contractor data it collects. |
| If it goes wrong | Reclassification exposes the hirer to PAYE arrears, pension (Pension Reform Act 2014), NSITF and ITF contributions, Labour Act notice and leave entitlements and NICN damages. A foreign company also risks a permanent establishment: section 17 of the Nigeria Tax Act 2025 widened PE to service-based presence, on top of the treaty "dependent agent" test where a contractor habitually concludes contracts on its behalf. |
Sources. Nigeria Tax Act 2025 and Nigeria Tax Administration Act 2025 bands, VAT, PE and e-invoicing rules from the Nigeria Revenue Service (formerly FIRS); Deduction of Tax at Source (Withholding) Regulations 2024 from the Federal Ministry of Finance; foreign-exchange and domiciliary-account rules from the Central Bank of Nigeria; Copyright Act 2022 from the Nigerian Copyright Commission; Micro Pension Plan from PenCom; NDPA 2023 from the Nigeria Data Protection Commission; WHT rates cross-checked against PwC Tax Summaries. Last verified 2026-09.
How Contractor of Record works in Nigeria
Three steps take you from "we want to engage this person" to the contractor's first payment.
Status check and contract
We test scope, hours, supervision, exclusivity and economic dependence against the NICN tests to confirm COR is the right vehicle, then Aniday's partner entity in Nigeria signs the contract for service with the contractor covering deliverables, fees, confidentiality, written IP assignment, data-handling and termination terms.
Onboarding and paperwork
We onboard the contractor: NIN/BVN-based identity check, TIN, VAT status and bank details, all filed into a compliance pack you can hand to your auditors.
Work, invoicing and payment
The contractor works with your team, and approved invoices or timesheets roll into a single Aniday invoice to you. The contractor is paid in naira on the agreed cycle, WHT is remitted and credit notes issued, and payment records are kept for the tax authorities and for you.
COR, EOR or contractor management software — which one in Nigeria?
| Contractor of Record | Employer of Record | Contractor management software | |
|---|---|---|---|
| Who is the counterparty | Aniday's partner entity in Nigeria contracts with the contractor | Aniday's partner entity in Nigeria employs the person | You contract directly from abroad; the tool only handles documents and payouts |
| Best for | Project work, part-time specialists, advisers, fractional roles | Full-time, supervised, ongoing roles | Companies that already have counsel, an entity or a risk appetite for classification |
| Classification risk | Assessed by Aniday; liability carried by Aniday | None — the person is an employee | Stays with you |
| WHT, PAYE, pension | 5% WHT deducted and remitted by our partner entity; no PAYE or pension for contractors | PAYE, pension, NSITF, ITF, NHF and statutory leave handled | No WHT (foreign payer); contractor manages FX, VAT and direct assessment alone |
| Convert later | Contractor → EOR employee in days | — | Manual |
🇳🇬 FAQs about Contractor of Record in Nigeria
Can I hire a contractor in Nigeria without a local company?
Yes. A foreign company can contract directly with a Nigerian resident, and no withholding applies because the payer has no Nigerian presence — but the contractor then handles dollar receipts, VAT and direct assessment alone, and you carry the classification, IP and PE exposure, which the Nigeria Tax Act 2025 widened. Under Aniday's Contractor of Record, Aniday's partner entity in Nigeria is the contracting party, so you need no local entity and the compliance sits with a Nigerian company.
Is withholding tax deducted when the contractor is paid?
Yes, because the payer is a Nigerian entity. Professional, consultancy, technical and management fees paid to a resident individual attract 5% WHT under the Deduction of Tax at Source (Withholding) Regulations 2024 (10% for a non-resident). Our partner entity deducts it, remits it to the tax authority of the state where the contractor lives, and issues the credit note, so it counts against the contractor's own direct assessment — it is not an extra cost.
How does the contractor pay income tax under the new Nigeria Tax Act?
Since 1 January 2026 individuals pay 0% on the first ₦800,000 of chargeable income, then 15%, 18%, 21% and 23% in bands up to ₦50 million and 25% above that, after a rent relief of 20% of rent up to ₦500,000. A contractor files by direct assessment with their state internal revenue service and offsets the WHT credit notes we issue. Residents are taxed on worldwide income, so the rules are the same whether the client is local or foreign.
Who owns the work my Nigerian contractor produces?
Without a written assignment, the contractor does. Section 28 of the Copyright Act 2022 vests copyright in the author unless an agreement says otherwise; commissioning a photograph, portrait or audiovisual work only gives the commissioner a licence for private use. Section 30 requires an assignment or exclusive licence to be in writing. Aniday's contract for service includes the assignment and a licence for the contractor's pre-existing materials, so ownership is settled before the first deliverable.
What happens if the contractor is found to be an employee?
The hirer faces PAYE arrears, pension contributions under the Pension Reform Act 2014, NSITF and ITF levies, Labour Act notice and leave entitlements, and damages in the National Industrial Court. A foreign hirer can also be found to have a permanent establishment in Nigeria under the widened section 17 of the Nigeria Tax Act 2025. Under our COR that exposure sits with Aniday's partner entity as the contracting party — and our classification assessment is designed to stop the engagement being set up that way in the first place.
Does the contractor need to charge VAT or issue e-invoices?
Usually not. VAT is 7.5%, but registration is turnover-based and the 2025 reform acts relieve small businesses from charging it, so most individual contractors invoice without VAT; a registered contractor charges 7.5% to our Nigerian entity, which we recover as input VAT. The national e-invoicing platform became mandatory for large taxpayers (₦5 billion turnover and above) in July 2026; smaller taxpayers come in later phases, and we handle the invoice format when it reaches them.
How is the contractor paid, and how fast can Aniday set one up in Nigeria?
In naira, by NIP bank transfer from our Nigerian partner entity, net of 5% WHT, on the cycle set in the contract — monthly is standard, milestone-based is common for project work. You pay one Aniday invoice in USD or SGD, so the contractor is not exposed to domiciliary-account or FX-access constraints. Set-up typically takes 3–7 business days from the classification assessment to a signed contract, provided the contractor's NIN, TIN and bank details are ready.
Client Reviews
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