Pension funds. PAYE brackets. NHF levies. Nigeria payroll, owned.
Nigeria’s payroll is not a configuration exercise. It demands a live pension contribution engine with PFA routing, progressive PAYE withholding across six brackets, NHF and NSITF levies, state-level PAYE variations, and in-country people with direct authority relationships. Most providers deliver two of these. Mercans delivers all of them – on a single proprietary stack with no intermediaries.
native payroll
vs nearest peer
since inception
- Pension ER
- 10% minimum (CPS)
- Pension EE
- 8% minimum (CPS)
- NSITF (Social Insurance)
- 1% ER only
- NHF (Housing)
- 2.5% EE (voluntary for private sector)
- ITF (Industrial Training)
- 1% ER (25+ employees)
- PAYE Rate
- 0%–25% progressive (NTA 2025)
- PAYE Brackets
- 6 bands · NGN 800K exempt
- CRA
- Abolished (NTA 2025)
- Min. Wage (National)
- NGN 70,000/month (2024)
- Overtime Standard
- CBA / employment contract
- 13th Month
- Not mandatory
- Gratuity
- Company policy / CBA
- Expat Quota
- Immigration approval
- NDPR / NDPA
- Active data protection
- Pay Cycle
- Monthly · NGN only
Payroll compliance: the details that can’t be missed
Nigeria’s regulators don’t grade on a curve. PenCom enforces pension remittance with criminal sanctions for non-compliance. FIRS levies penalties on late PAYE submissions. NSITF can prosecute employers who fail to register. State-level PAYE variations across 36 states and the FCT create a compliance matrix that most global platforms cannot model. None of these failures announce themselves – they accumulate silently until an audit makes them very visible.
Pension non-remittance + PenCom sanctions
Late pension contributions trigger PenCom enforcement actions including 2% monthly penalty on outstanding amounts and potential criminal prosecution of directors under the Pension Reform Act 2014.
PAYE miscalculation – FIRS audit
Incorrect bracket application under NTA 2025, failure to apply the NGN 800K exempt band, or using abolished CRA rules triggers FIRS assessments with penalties of 10% plus interest at the prevailing Central Bank rate.
NSITF non-registration = criminal exposure
Failure to register with NSITF and remit contributions exposes employers to criminal prosecution under the Employee Compensation Act 2010. Directors face personal liability including imprisonment.
Expatriate quota non-compliance = work permit revocation
Nigeria’s Immigration Service enforces expatriate quotas strictly. Non-compliance triggers work permit revocation, deportation orders, employer fines, and potential blacklisting from future quota approvals.
The three types of providers who struggle with Nigeria
Global Aggregator Platforms
Platforms like Deel, Remote, and Rippling operate through a partner network in Nigeria — they don’t own the entity, don’t directly manage PFA routing, and don’t control the compliance relationship. When regulations change, the instruction travels: platform → partner → your payroll.
- ×No direct PenCom/PFA relationship — partner handles pension routing
- ×State-level PAYE variations not modelled
- ×NHF and NSITF contributions often missed or manually applied
- ×Expatriate quota management absent
Large Global Payroll Incumbents
ADP, Ceridian, and similar incumbents have Nigeria coverage — in name. In practice, their Africa coverage is often delivered through regional partners or legacy systems that weren’t built for Nigeria’s multi-PFA pension architecture, NTA 2025 bracket transition, or state-level PAYE compliance.
- ×Pension contributions often remitted to single PFA — no employee-choice routing
- ×NTA 2025 bracket transition not implemented
- ×Long implementation timelines — Nigeria not a core market
- ×No FIRS TaxPro Max integration
Local Nigerian Firms
Local Nigerian payroll firms know the market — but they can’t scale with you. No payroll technology platform, no HCM integration, no multi-country consolidation, and no data security certifications that multinationals require. Fine for 15 employees. Inadequate at 150.
- ×No proprietary payroll technology — manual spreadsheet-based processing
- ×No HCM connector — Workday, SAP, Oracle feeds require custom work
- ×No data security certifications (SOC 1/2, ISO 27701, BCR)
- ×No Africa consolidation — cannot report across Nigeria + other markets
The only provider that closes every gap
Mercans is the only Nigeria payroll provider that combines a proprietary payroll technology stack, full-time in-country compliance teams, direct authority relationships, and enterprise-grade data security – simultaneously, on one contract, with no intermediaries.
The only engine built for Nigeria’s actual payroll architecture
G2N Nova™ natively models Nigeria’s Contributory Pension Scheme with employee-choice PFA routing, handles NTA 2025 six-bracket PAYE progressive withholding with NGN 800K exempt band, calculates NSITF, NHF, and ITF levies as distinct calculation layers, and auto-generates FIRS TaxPro Max and PenCom reporting outputs. This isn’t configuration. It’s engineering.
Full-time Nigeria team – not a partner you phone when things break
Mercans employs full-time payroll and compliance professionals in Nigeria. They maintain active relationships with FIRS, PenCom, NSITF, and the Nigerian Immigration Service – not through a contact directory, but through ongoing regulatory engagement. When PenCom updates contribution rules, when FIRS changes TaxPro Max filing requirements, when the national minimum wage is adjusted – we know before it reaches your inbox.
The security posture multinationals require – and Nigeria now mandates
Nigeria’s NDPA (Nigeria Data Protection Act 2023) and the NDPR (Nigeria Data Protection Regulation 2019) require payroll processors handling employee personal data to maintain documented privacy controls. NDPC (Nigeria Data Protection Commission) can impose fines up to 2% of annual gross revenue. Mercans holds BCR approval, ISO 27701 certification, SOC 1 & 2 certifications, and ISO 27017/27018. Zero security breaches since inception.
Where Mercans wins on every Nigeria-specific capability
Each row is a Nigeria-specific capability. Each cell shows native coverage as a fill bar – full = native in-platform, half = partial / manual workaround, empty = gap.
Nigeria Capability Coverage · 11 dimensions
ER 10% + EE 8% · employee-choice PFA
National Housing Fund Act
Workday · SAP · Oracle
Every rate. Every cap. Every obligation.
Nigeria payroll operates on exact numbers with hard deadlines. Mercans builds every figure below into G2N Nova™ and monitors them proactively – so you’re never discovering a rate change from a penalty notice.
Nigeria · Rate & Compliance Dashboard
Live 2025–26Pension Is Routed to Employee-Chosen PFAs
Nigeria’s Contributory Pension Scheme requires contributions to be remitted to the specific Pension Fund Administrator (PFA) chosen by each employee. With 20+ licensed PFAs, employers must route contributions individually – not to a single fund. PenCom monitors remittance timing and accuracy.
→ Multi-PFA routing with employee-choice management in G2N Nova™NTA 2025 Replaces CRA with Tax-Free Band
The Nigeria Tax Administration Act 2025 (effective January 2026) abolishes the Consolidated Relief Allowance (CRA). Instead, the first NGN 800,000 of annual income is fully exempt. Six new progressive brackets (0%, 15%, 18%, 21%, 23%, 25%) replace the old 7%–24% structure. Employers must transition immediately.
→ NTA 2025 brackets implemented in G2N Nova™PAYE Is Administered at State Level, Not Federal
While PAYE rates are set federally, administration and collection are handled by State Internal Revenue Services (SIRS). Lagos, Rivers, and other states may have specific filing requirements, electronic platforms, and enforcement practices. Multi-state employers must file separately in each state where employees are based.
→ State-level PAYE filing across all 36 states + FCTNDPA Compliance Is a Payroll Processor Obligation
Nigeria’s NDPA 2023 places explicit obligations on data processors, including payroll providers. The NDPC can impose fines of up to 2% of annual gross revenue or NGN 10 million (whichever is higher). Payroll data containing employee PII triggers compliance obligations for both the controller (employer) and processor (payroll provider).
→ BCR · ISO 27701 · NDPA processor agreements standardRun a Nigeria payroll. Right here, right now.
Switch workforce type. Move the sliders. Every number you see is the same calculation G2N Nova™ runs in production – pension routing, NTA 2025 PAYE progressive withholding, NHF deduction, and true cost of employment exposed live.
Nigeria Payroll Sample · Live
G2N Nova™ engineEight things only Nigeria experts know to handle
These are the compliance details that don’t appear in standard payroll setup guides – but appear in every PenCom audit, FIRS assessment, and NICN case we’ve encountered in Nigeria over 15 years.
Pension Contributions Must Route to Employee-Chosen PFAs
Nigeria’s CPS requires employers to remit pension contributions to the specific PFA chosen by each employee. With 20+ licensed PFAs, multi-PFA routing is mandatory. PenCom audits remittance timing (due by the 7th of following month) and can impose 2% monthly penalties plus criminal prosecution for directors.
NTA 2025 Replaces CRA with Tax-Free Band and New Brackets
The Nigeria Tax Administration Act 2025 (effective January 2026) abolishes CRA entirely. The first NGN 800,000 of annual income is exempt. Six new brackets apply: 0% (first 800K), 15% (800K–3M), 18% (3M–12M), 21% (12M–25M), 23% (25M–50M), 25% (above 50M). Pension contributions remain deductible.
PAYE Is Collected by States, Not Federal Government
While PAYE rates are uniform nationally, collection and enforcement are handled by the 36 State Internal Revenue Services (SIRS) plus the FCT-IRS. Lagos LIRS, Rivers RIRS, and other states have different filing platforms, deadlines, and enforcement practices. Multi-state employers must file and remit separately in each state.
NHF Is an Employee-Only Deduction – Not Employer-Matched
The National Housing Fund (NHF) requires employees earning above the national minimum wage to contribute 2.5% of basic salary. This is an employee-only deduction – no employer matching. However, the employer is responsible for deducting and remitting. Failure to remit triggers penalties under the NHF Act.
NSITF Non-Registration Is a Criminal Offence
The Employee Compensation Act 2010 requires all employers to register with NSITF and contribute 1% of total payroll. Non-registration is a criminal offence carrying fines and imprisonment. NSITF provides workplace injury compensation – unregistered employers bear full liability for all injury claims.
Expatriate Quota Positions Must Be Approved in Advance
Foreign workers require approved expatriate quota positions from the Federal Ministry of Interior before obtaining work permits (CERPAC). Each position must specify the role, duration, and justification. Quota positions are industry-specific and limited. Using quota positions for different roles than approved triggers revocation.
National Minimum Wage Applies to All Employers with 25+ Workers
The National Minimum Wage Act 2019 set the minimum at NGN 30,000/month, raised to NGN 70,000 in 2024. This applies to employers with 25 or more employees. Smaller employers may be exempt. The minimum wage includes basic salary only – housing, transport, and other allowances are separate.
Gratuity Is Not Statutory – But Creates Contractual Liability
Unlike pension, gratuity in Nigeria is not mandatory under statute. However, it is commonly included in employment contracts and CBAs. Once contractually committed, it becomes an enforceable obligation. The NICN (National Industrial Court) enforces gratuity claims based on contract terms, not statute.
One workforce. Two entirely different compliance tracks.
The foundational split in Nigeria payroll – Nigerian employees on full CPS pension + NTA 2025 PAYE vs. expatriate workers on quota-based employment – is not a configuration toggle. It requires two distinct calculation engines, two sets of filing obligations, and two different authority relationships. Mercans runs both simultaneously on every pay cycle.
Parallel Compliance Engines
CPS pension from Day 1. Employer 10% + Employee 8% minimum on total emoluments (basic + housing + transport). Contributions routed to employee-chosen PFA. Remittance by 7th of following month.
PAYE under NTA 2025. First NGN 800,000 exempt. Six progressive brackets (15%–25%) apply above the exempt band. CRA abolished. Pension contributions remain deductible. PAYE remitted to State IRS where employee is based.
NHF + NSITF + ITF add statutory costs. NHF 2.5% (EE, now voluntary for private sector), NSITF 1% (ER), ITF 1% (ER for 25+ employees). Each has different authorities, filing requirements, and enforcement mechanisms.
Gratuity is contractual, not statutory. Employment contracts and CBAs define gratuity terms. Once committed, they are enforceable through the NICN. Accrual provisioning must reflect contractual terms.
Expatriate quota must be approved before hiring. Each foreign worker position requires Federal Ministry of Interior approval. Quota positions are role-specific and non-transferable. Using quota for different roles triggers revocation.
CERPAC is mandatory for all foreign workers. The Combined Expatriate Residence Permit and Aliens Card must be obtained within 3 months of arrival. Annual renewal required. Non-compliance triggers deportation and employer fines.
Expats pay full PAYE on Nigeria-sourced income. No special expat tax rate – standard NTA 2025 PAYE brackets apply. Pension obligations depend on employment duration (permanent vs. fixed-term). NHF voluntary for private sector.
Independent contractors face WHT at source. Withholding tax on service payments to contractors is 10% for companies and 5% for individuals. WHT is a credit against final tax liability. Cross-border contractors may trigger DTA relief claims.
Every obligation. Every authority. Mercans owns the calendar.
Nigeria compliance runs across FIRS, PenCom, NSITF, NHF, and State IRS on monthly, annual, and event-triggered cadences. Mercans’ managed payroll absorbs every filing as standard scope – you don’t track deadlines. We do.
PAYE Remittance to State IRS
PAYE withholding remitted to the relevant State Internal Revenue Service where the employee is based. Each state has its own filing platform and payment channels. Late remittance triggers 10% penalty plus interest.
CPS Pension Remittance to PFAs
Employer (10%) and employee (8%) pension contributions remitted to individual employee-chosen PFAs via the PenCom remittance platform. Late remittance triggers 2% monthly penalty and potential director prosecution.
NSITF + NHF + ITF Contributions
NSITF 1% (ER), NHF 2.5% (EE), and ITF 1% (ER, 25+ employees) remitted monthly to their respective authorities. Each has different filing requirements and bank channels.
Annual PAYE Return
Annual return reconciling all monthly PAYE remittances for the calendar year. Filed with each relevant State IRS. Discrepancies against monthly remittances trigger assessments and additional penalties.
Tax Clearance Certificate
Annual Tax Clearance Certificate (TCC) confirms that all tax obligations have been met. Required for government contracts, foreign exchange applications, and expatriate quota renewals. Non-obtainment blocks multiple business activities.
PFA Registration & Transfer
New employees must nominate a PFA and open a Retirement Savings Account (RSA). Employee-initiated PFA transfers (once per year) require employer coordination. PenCom monitors compliance with transfer processing timelines.
Final Settlement & Pension Access
Terminal benefits include prorated leave, gratuity (if contractual), and final PAYE reconciliation. Pension access is restricted until age 50 or retirement. Early access only for 4+ months unemployment under PRA 2014.
Expatriate Quota & CERPAC Renewal
Expatriate quota positions and CERPAC permits require annual renewal. Tax clearance certificate, company audited accounts, and quota utilisation report required. Non-renewal triggers deportation orders and employer penalties.
Nigeria is one market.
Mercans covers the entire continent.
For companies running payroll across multiple African markets, complexity multiplies – not adds. Each country runs its own labour authority, pension system, and tax withholding regime. Mercans covers all major African markets on a single platform with country-specific compliance engines running in parallel.
covered
1 contract
consolidation
Africa
Every filing. Every format. Submission-ready.
Mercans generates the exact file types that FIRS, PenCom, NSITF, NHF, and State Internal Revenue Services expect to receive — not formatted summaries that need reformatting before you can submit them.
