Tax on trading in your country
What you learn in 3 minutesTrading profit is income, and in Nigeria income tax applies to it. The authority that wants to hear about it is the Federal Inland Revenue Service (FIRS) for companies, and your state internal revenue service for personal income. The amount you owe depends on your total income for the year, so a small profit may fall below the threshold where tax starts. This lesson shows you what to record from day one so you can answer questions later without guesswork.
One trade, one tax year
| Step | Amount | Note |
|---|---|---|
| Trade result before costs | ₦21,700 | 20 pips on 0.10 standard lots of EUR/USD. One pip on one standard lot is 10 units of the quote currency. 20 x 10 x 0.10 = 20 units. At an exchange rate of ₦1,085 per unit, 20 x ₦1,085 = ₦21,700. |
| Broker commission | ₦1,500 | A typical commission on 0.10 lots. This varies between brokers. |
| Spread cost | ₦2,170 | A spread of 2 pips on 0.10 lots. 2 x 10 x 0.10 = 2 units. 2 x ₦1,085 = ₦2,170. Spreads vary between brokers and with market conditions. |
| Net profit for the trade | ₦18,030 | ₦21,700 minus ₦1,500 minus ₦2,170. |
Your broker may round pip values, charge swap or overnight fees, or apply a different exchange rate when converting to naira. These change the final figure.
The mistake people make here
The common mistake is to treat trading as a hobby and keep no records, then guess at tax time. Instead, download a statement from your broker every month and save it. Record every deposit, withdrawal, fee and trade result in naira. If you are unsure whether you owe tax, ask a Nigerian tax professional. Do not rely on what another trader tells you.Check yourself
You make 30 pips on 0.20 standard lots of EUR/USD. One pip on one standard lot is 10 units of the quote currency. If the exchange rate is ₦1,085 per unit, what is the result before costs?
30 pips x 10 units per pip x 0.20 lots = 60 units. 60 x ₦1,085 = ₦65,100.
If your broker charges ₦2,000 commission and the spread costs ₦4,340, what is your net profit from the ₦65,100 above?
₦65,100 minus ₦2,000 minus ₦4,340 = ₦58,760.
In Nigeria
- Tax authority for personal income
- State internal revenue service where you live
- Tax authority for companies
- Federal Inland Revenue Service (FIRS)
- Type of income
- Trading profit is generally treated as income, not capital gains, but this can depend on how often you trade. Ask a tax professional.
- Records to keep
- Broker statements, deposit and withdrawal receipts, and a summary of profit or loss in naira for each tax year
- Regulator of brokers
- SEC Nigeria. Check that a broker is registered before you send money.