What you need to know about the newly ratified Rwanda-Nigeria double taxation agreement

Minister of Finance Yusuf Murangwa signed the Rwanda-Nigeria double taxation agreement on June 25. Courtesy

Overview of the Rwanda–Nigeria Double Taxation Agreement

The ratification of Rwanda–Nigeria DTA was done through a law and a Presidential Order and was published in the Official Gazette dated August 28, 2025, which was published on August 29, 2025, in accordance with the requirements of Article 168 of the Constitution of Rwanda. International treaties and agreements concerning commerce can only be ratified after approval by the Parliament.

Double taxation agreements are critical instruments in international taxation because they provide a logical and consistent framework for allocating taxing rights between two countries. They prevent situations where individuals or companies face tax liabilities in both jurisdictions simply because they have ties of residency or income sources in each. In this way, DTAs guarantee that taxpayers are not subject to arbitrary or excessive taxation, while also giving businesses operating internationally a more predictable fiscal environment. Many such agreements draw inspiration from the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention, which has become the global standard for promoting tax fairness and reducing opportunities for tax avoidance through mechanisms such as treaty shopping.

Scope of the Agreement

The Rwanda–Nigeria DTA covers a wide range of taxes already in place in Rwanda and Nigeria. In Nigeria, the agreement applies to Personal Income Tax, Companies Income Tax, Petroleum Profits Tax, Capital Gains Tax, Police Trust Fund Levy, and National Agency for Science Engineering Infrastructure Levy.

In Rwanda, it also extends to Personal Income Tax, Corporate Income Tax, Capital Gains Tax, and Tax on Rent of Immovable Property. It also applies to any taxes that may be introduced in the future which are substantially similar to those already covered. It clarifies definitions, as well as individuals, companies, and other bodies recognised as entities for tax purposes, confirming broad coverage and clarity in its application.

Taxation of Directors’ Fees and Senior Management Remuneration

Among its specific provisions, the Rwanda–Nigeria DTA addresses the taxation of directors’ fees, salaries, wages, and remuneration of individuals in senior management roles. In line with international practice and consistent with Article 16 of the OECD and UN Model Tax Conventions, such income may be taxed in the state where the company paying the remuneration is resident.

Mechanisms for Eliminating Double Taxation

A fundamental feature of the Rwanda–Nigeria DTA is the mechanism for eliminating double taxation. Nigeria adopts the credit method whereby Rwandan taxes paid on income sourced in Rwanda are credited against Nigerian taxes due on the same income. However, the credit is capped at the amount that would be payable if Nigerian tax rates applied. Rwanda, on the other hand, uses the deduction method. Under this approach, Rwandan residents can deduct taxes paid in Nigeria from their Rwandan tax liabilities, though the deduction cannot exceed the Rwandan tax otherwise payable on that income. While less common than the credit or exemption methods, the deduction system serves the same purpose of ensuring taxpayers are not taxed twice on the same income.

Entry into Force, Implications, and Rwanda’s Broader DTA Network

With the ratification process now completed, the Rwanda-Nigeria DTA has both immediate and long-term implications.

It indicates the commitment of both countries to encourage cross-border trade and investment by offering clarity and certainty in tax matters. At the same time, it incorporates measures to prevent tax avoidance and evasion, conforming with global initiatives such as the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, which seeks to create a more transparent and coherent international tax system.

For developing economies like Rwanda and Nigeria, DTAs of this nature are particularly important. They help strike a balance between attracting foreign investment and protecting national tax revenues.

Nigeria now joins the list of countries with which Rwanda has concluded double taxation treaties. These include Barbados, Belgium, China, DR Congo, Jersey, the Republic of Korea, Luxembourg, Mauritius, Morocco, Qatar, Singapore, South Africa, Türkeye, and the United Arab Emirates.