Company income tax act requires that income received in or brought into Nigeria should be subjected to tax and any Nigerian who earns his income from abroad will be taxed in the country where the income originates and at the same time such income would also be taxed in Nigeria where the recipient resides. The implication of this is that the same income received is being taxed twice. To lessen the burden imposed by double taxation on recipients, various countries have therefore, made provisions for double taxation relief.

Part VI of CITA contains the provisions relating to double taxation relief. Section 32 in this part deals with circumstances where there are no specific double taxation agreements while section 33 and 34 cover cases where there are agreements. The double taxation relief is also applicable to individuals and is governed by section 23, 24, & 25 of ITMA 1961. The incomes of both individuals and companies are assessable to tax on the basis of their residences. It is possible for an individual to be regarded as resident in more than one country for income tax purposes in any particular year of assessment. As a result of this, an individual’s income, if remitted or taken to another country from its country of origin may be taxed in the same tax year.

It is for this purpose of lessening this burden of double taxation that various tax laws provide for double taxation relief. In Nigeria, we have the Commonwealth income tax relief and the Double taxation

agreement. Arrangements or agreements are usually made between countries on reciprocal basis. Presently, Nigeria has agreements with the United Kingdom, USA, Denmark, Norway, Sweden, New Zealand, Ghana and Sierra Leone. This unit will expose you to the two categories of double taxation relief, that is, the commonwealth income tax relief and the double taxation agreement.


At the end if this unit, you should be able to:

  1. discuss the concept of double taxation reliefs in clear terms
  2.  describe the conditions for granting the reliefs to taxpayers
  3.  explain the meaning of resident and non-resident taxpayers
  4.  discuss, in details, matters to be dealt with in a double taxation agreement
  5.  state the kind of incomes that are exempted from double taxation relief.


3.1 Commonwealth Income Tax Relief

The tax payable in a commonwealth (foreign) country is referred to as commonwealth income tax. This is defined in section 32 (3) of the act as “any tax on income or profit of companies charged under a law in force in any country within the commonwealth or in the Republic of Ireland which provides for relief from tax charge both in that country and Nigeria, in a manner corresponding to the relief granted by this sector. 3.1.1 Conditions for Granting Commonwealth Relief

Take note of the following: 

  1. The income of the foreign taxpayer must be taxable in Nigeria. That is, a foreign taxpayer or any taxpayer must be resident in Nigeria in that year of assessment;
  2. The income must have also been subjected to tax in another country;
  3. There must be no double taxation agreement between Nigeria and the other country. That is, the double taxation relief and the double taxation arrangement cannot be negotiated by one country with Nigeria, simultaneously;
  4.  The concession must be mutual between the countries.

3.1.4 Double Taxation Agreement (DTA)

Double Taxation Agreement (DTA) is an international treaty set up by the United Nations for the avoidance of double taxation and to prevent evasion of taxation on income and capital goods between countries. The taxes that are subject to this agreement in Nigeria include personal income tax, capital gains tax, companies’ income tax, and petroleum profit tax.

Double taxation agreement also applies to any identical or substantially similar taxes which are imposed by either contracting countries. Notifications of any substantial changes which have been made in their respective taxation laws are strictly observed by the contracting countries. Termination of this agreement is through diplomatic channels by giving of audience notice. The thrust of double taxation agreement is essentially to provide that a contracting state should give credit for taxes paid in the other contracting country.