Nigerian founders are increasingly registering U.S. companies to access payment platforms, global customers, and U.S. investors. If you’re one of them, you might be wondering: do I need to file U.S. taxes from Nigeria?
Yes—you do. If you’ve formed a U.S. LLC or corporation, the IRS requires you to file taxes each year. Where you live doesn’t matter—filing is based on where your company is registered.
U.S. Federal Tax Obligations
What Forms You Need to File (By Entity Type)
C-Corporation
- Form 1120 – U.S. Corporation Income Tax Return
- Form 5472 – If 25% or more of your company is foreign-owned and you had reportable transactions
- Form 5471 – Required if your U.S. corporation owns at least 10% of a foreign corporation (e.g., a subsidiary in Nigeria or another African country). This is especially relevant if your U.S. company is the parent entity in a group of operating subsidiaries across Africa.
What Is Form 5471?
Form 5471 is an informational return used to report the activities, ownership, and financials of a foreign corporation that is owned—directly or indirectly—by a U.S. person or U.S. entity.
It includes:
- Ownership structure and changes
- Income statement and balance sheet of the foreign subsidiary
- Intercompany transactions and transfers
This form is essential for transparency and tax compliance, as the IRS wants to know how profits are being shifted across borders. If you're raising money into a U.S. C-Corp and using it to fund African operations, this form is very likely required.
Penalties for failing to file Form 5471 start at $10,000 per form, per year, so it's important to get this right. Bookmate helps companies navigate these filings safely.
Single-Member LLC (Disregarded Entity)
- Form 5472 + Pro Forma 1120 – Required even with no income if there are reportable transactions
Multi-Member LLC (Partnership)
- Form 1065 – U.S. Return of Partnership Income
- Schedule K-1 – Issued to each partner
Individual Filing
- Form 1040-NR – Required if you earned U.S.-sourced income that is effectively connected with a U.S. trade or business
What Is ECI (Effectively Connected Income)?
This refers to income that is linked to U.S. business activity:
- Services performed in the U.S.
- U.S.-based employees or contractors
- Rental income from U.S. property
If you only sell to U.S. customers while operating from Nigeria, that doesn’t usually create ECI. But having a team, office, or presence in the U.S. might.
Common Nigerian Business Types That Must File
- Software or SaaS platforms targeting U.S. users
- Freelancers and consultants working with U.S. companies
- Online stores shipping from U.S. warehouses
- Startups seeking U.S.-based funding
U.S. Tax Culture vs. Nigeria
Auditing and Filing
In Nigeria, many businesses prepare financial statements and may deal with external auditors or the FIRS. In the U.S., small companies are rarely audited unless there’s an issue. Tax filings are also private and not accessible to the public.
VAT vs. U.S. Sales Tax
Nigeria uses Value-Added Tax (VAT), which is:
- A consumption tax applied at every stage of production and distribution
- Typically 7.5% on most goods and services
The U.S. uses sales tax, which is:
- Charged only on the final sale to the end consumer
- Managed by individual states (not the federal government)
- Mostly applies to physical goods
Service-based companies usually do not collect sales tax in the U.S. However, physical goods sellers may have to register for sales tax depending on their activities and customer locations.
Bookmate does not provide sales tax filing services.
Common Misunderstandings
- No revenue = no tax filing – Incorrect. You still have to file annually.
- I live in Nigeria, so U.S. tax rules don’t apply – False. U.S. company formation creates filing responsibilities.
State Obligations: Delaware and Wyoming
Delaware Franchise Tax (C-Corps)
- Due: March 1
- Cost: $225–$400+ depending on your share structure
Delaware LLC Franchise Tax
- Due: June 1
- Cost: $300 flat
Wyoming Annual Report
- Due: Company anniversary month (the month your company was formed)
- Cost: Starts at $60
These state-level requirements are in addition to IRS federal filings.
Do You Need an ITIN?
If you earn U.S.-sourced income personally and need to file Form 1040-NR, you’ll need an ITIN (Individual Taxpayer Identification Number).
Summary
If you own a U.S. company from Nigeria, you’re required to file U.S. tax forms annually. Your entity type and U.S. activity determine which forms apply. Even if you owe no tax, missing a filing can lead to large penalties.
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Let Bookmate help simplify your U.S. tax obligations.
