How are expenses managed in Nigeria?

Modified on: Mon, 22 Sep, 2025 at 2:30 PM

TABLE OF CONTENTS

Reimbursable Expenses vs. Taxable Benefits
Required Documentation for Expenses
Travel & Mileage Reimbursement
Invoicing Requirements
Reimbursement & Taxability
Compliance Considerations

At Horizons, we prioritize a smooth and compliant expense reimbursement process for our team members in Nigeria. This guide outlines how expenses are managed, documented, and reimbursed in accordance with Nigerian tax laws and company policy.

Reimbursable Expenses vs. Taxable Benefits

Understanding the distinction between reimbursable expenses and taxable benefits is essential:

Reimbursable Expenses: These are directly related to business activities and are not taxed. Examples include office supplies, business travel, and client-related meals.
Taxable Benefits: If an expense provides a personal benefit (e.g., personal travel, non-business meals), it may be considered taxable under Nigerian law.

Note: All expenses must be properly documented to demonstrate their business nature in case of audits by Nigerian tax authorities.

Required Documentation for Expenses

To ensure expenses are valid for reimbursement and tax purposes, receipts and invoices must include:

Date of Transaction: When the expense occurred.
Detailed Description: Clear explanation of the goods/services purchased.
Amount and Currency: Total cost and currency used.
Supplier Details: Name and contact information of the vendor.
Tax Information: VAT amount and supplier’s VAT registration number (if applicable).

Travel & Mileage Reimbursement

Mileage Reimbursement: Only applicable when a per diem is paid. Otherwise, travel expenses are reimbursed based on actual costs incurred.
Parking & Tolls: These are reimbursed as separate expenses with receipts, not part of the mileage log.
Travel Restrictions: There are no restrictions on business travel.
Transport Modes: No specific rules apply to air, bus, train, tram, taxis, or rental cars.

Invoicing Requirements

Receipts/Invoices: Must be issued in the company’s name (Horizons Global Technology Pte Limited) to qualify for tax-free reimbursement.
Mandatory Invoicing: Yes, invoices are always required unless the expense falls under a miscellaneous threshold defined by company policy.
Threshold for Receipts: For small or miscellaneous expenses, the need for receipts is determined by internal policy.

Reimbursement & Taxability

Tax-Free Reimbursable Expenses: Office-related expenses with proper documentation.
Per Diems: Not taxable if they represent reimbursement for business-related costs and are supported by an expense report.
Entertainment & Gifts: Reasonable expenses for client entertainment or team events are allowed and deductible.
Health & Wellness Claims: Eligibility (e.g., gym, therapy, medical bills) is based on company policy and the employment contract.
VAT on Expenses: If VAT is charged on a reimbursable expense, the full amount including VAT will be reimbursed. No additional VAT is applied.

Compliance Considerations

To ensure compliance with Nigerian tax regulations:

Expenses must be wholly, necessarily, and reasonably incurred for business purposes.
Proper documentation is essential for all claims.
Expense reports must be submitted in a timely manner and aligned with company policy.

Good to know

To review how to submit an expense and/or an expense report on the Horizons platform, take a look at this separate article:
How to submit expenses?

To review how to appove an expense and/or an expense report on the Horizons platform, take a look here:
How do I approve an expenses report?

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Nigeria