How to pay international contractors in Nigeria [2025]

Author

Vanessa Kahkesh

Published

September 5, 2023

Updated

June 2, 2025

Read time

4 MIN

In this article

With over 200 million residents and a rapidly growing tech sector, Nigeria is a hub for innovative and talented contractors. But if you're a global company aiming to tap into this workforce, how can you ensure that you're compensating them correctly while remaining compliant with Nigerian labor laws?

Navigating the regulations can be a bit of a maze, but with the right guidance, you can make Nigerian contractors a seamless part of your international team. Dive into our step-by-step guide below to get a comprehensive understanding of managing and paying contractors compliantly in Nigeria.

Step #1: Classify your workers in Nigeria

Misclassifying workers in Nigeria can lead to severe penalties, including hefty fines and potential legal action. Not all misclassification is intentional though; you might inadvertently bypass critical components of Nigerian law, such as the act that stipulates the rights of full-time employees, which doesn't apply to freelancers. Accordingly, it's crucial to understand the distinction between full-time employees and independent contractors:

Contractors	Employees
High level of worker control. Contractors maintain a high level of control over their work. They also enjoy significant freedom in scheduling.	More direction from the employer. Employees work under the direction and guidance of their employer.
Contractors typically use their own tools and equipment.	Employees often use tools or equipment provided by the company.
Less integrated. Contractors operate independently and often work remotely.	Highly integrated. Employees are integrated into the company's hierarchy and usually work on-site.
No entitlement to benefits. Contractors do not receive the same benefits as employees and handle their own tax responsibilities.	Entitled to benefits. Employees are entitled to a range of benefits, like annual leave, maternity leave, sick leave, and overtime pay.
Time-bound engagement. Contractors’ engagements are often time-bound or project-based.	Indefinite engagement. Employees often enjoy stability through indefinite contracts.
Risk of loss. Contractors shoulder the risk for their work.	No risk of loss. Employees are protected from professional risks by their employer.
Subcontracting. Contractors have the freedom to delegate or subcontract their tasks.	No subcontracting. Employees can't delegate their responsibilities without company approval.

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Step #2: Determine the best way to pay your contractors in Nigeria

Paying contractors in Nigeria has its unique challenges due to fluctuating exchange rates and regulations around international transfers. Here are some methods to consider:

Bank or wire transfers: Bank transfers are a common payment method used internationally. You can also send a wire transfer via SWIFT to a Nigerian contractor, but it might come with fees and longer processing times.
Online payment services: When paying contractors in Nigeria, various online payment services can facilitate the process. You could consider popular platforms like PayPal, TransferWise (now known as Wise), and Payoneer. Or, you could go with a local platform like Flutterwave and Paystack. Keep in mind that PayPal in Nigeria does not allow the receipt of funds; it only allows funds to be sent from Nigeria to another country. Always confirm with your contractor regarding their payment preferences.
Global payroll services: Since contractors aren’t typically included in payroll, they usually invoice separately for their services. But with Rippling, you can pay Nigerian contractors in one system anywhere in the world.

Step #3: Use global payroll software to process payments for Nigerian contractors

Global payroll software, like Rippling, can be a game-changer. Not only does it simplify the payment process, but it also ensures that you stay compliant with local laws and regulations.

With Rippling, you can pay contractors worldwide. Here’s a preview of Rippling’s global payroll system:

An animation demonstrating the process of running payroll in Rippling on a tablet, starting with a screen titled "Run Payroll" with a list of employees, then a screen titled "Approve and Run Payroll," and a success screen that says, "You're all set!"

Step #4: Ensure your Nigerian contractor has the right tax information

When it comes to managing and paying independent contractors in Nigeria, making sure your contractor understands their tax obligations is pivotal. Not only does this ensure your business remains compliant, but it also offers clarity to your contractors about their responsibilities:

TIN registration: All contractors in Nigeria need to register for a Tax Identification Number (TIN) with the Federal Inland Revenue Service (FIRS).
Issuance of invoices: Contractors must issue valid invoices for services rendered, which will serve as a basis for their income declarations.
Income tax filing: Independent contractors in Nigeria are subject to personal income tax at varying rates, depending on their earnings. They need to declare their earnings and file tax returns annually.
VAT obligations: If a contractor provides certain services or goods, they might be required to charge and remit value-added tax (VAT) to the FIRS. Registration for VAT is essential for those who fall under this category.

Effortlessly manage contractors around the world

Expanding your international workforce has never been easier. With Rippling, you can quickly pay international contractors in Nigeria and globally.

Frequently asked questions about running payroll for contractors in Nigeria

Hire and pay your contractors in Nigeria with Rippling

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Disclaimer

Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.

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Author

Vanessa Kahkesh

Content Marketing Manager, HR

Vanessa Kahkesh is a content marketer for HR passionate about shaping conversations at the intersection of people, strategy, and workplace culture. At Rippling, she leads the creation of HR-focused content. Vanessa honed her marketing, storytelling, and growth skills through roles in product marketing, community-building, and startup ventures. She worked on the product marketing team at Replit and was the founder of STUDENTpreneurs, a global community platform for student founders. Her multidisciplinary experience — combining narrative, brand, and operations — gives her a unique lens into HR content: she effectively bridges the technical side of HR with the human stories behind them.