Paid in USDT or USDC? A Nigerian freelancer's guide to VAT and withholding tax

Your client pays in stablecoin, your rent is in naira, and nobody hands you a payslip. Here is what the tax rules actually ask of you, and the paperwork that makes answering them a short evening instead of a bad week.

SEPTEMBER 12, 2026   9 MIN READ

You build things for a studio in Berlin, or a startup in Austin, or an agency in Nairobi. The invoice goes out in dollars. The money arrives as USDT or USDC, usually the same week, sometimes the same hour. Nobody sends you a payslip, nobody deducts anything, and for a while it feels like the tax question belongs to somebody else.

It does not. And the good news, which almost nobody tells freelancers plainly, is that the rules here are not complicated. They are just badly explained, and they are usually explained by people who assume you are a company with an accountant.

The short version

• •Being paid in stablecoin does not change whether you owe tax. Income is income, whatever it arrives as.
• •The 5 percent some Nigerian clients deduct is withholding tax. It is not a fee and it is not lost. It is tax you have already paid, and you need the credit note to claim it.
• •VAT is a separate question from income tax, and most freelancers are below the turnover threshold where it applies at all.
• •Your income tax as a self employed person goes to your STATE revenue service, not to FIRS. VAT is the federal one.
• •What actually catches people out is not the rate. It is that they cannot produce a record of what they earned.

Stablecoin is not a loophole, and it is not a problem either

The first thing worth settling is that there is nothing exotic about being paid this way. Nigerian tax law taxes income. It does not have a separate, gentler regime for money that arrived as a token, and it does not have a harsher one either. If a client pays you the equivalent of two thousand dollars for a month of work, you earned that, on the day you received it, at whatever it was worth in naira that day.

That last clause is the whole practical difficulty. A salaried person has a number. You have a token balance and a memory of roughly what the rate was. Which means the work is not understanding the rule, it is being able to show the number, months later, to somebody who is entitled to ask.

This is also why it is worth converting deliberately rather than in scattered bits across whatever channel is convenient that afternoon. Every conversion that leaves no record is a line you will have to reconstruct from memory at filing, and reconstructed numbers are exactly the ones that get questioned.

Withholding tax: the 5 percent your client keeps

If your client is a Nigerian company, there is a good chance they will pay you less than you invoiced and tell you the difference went to the revenue service. For professional and technical services supplied by an individual, that deduction is 5 percent. They are required to do it. It is not them being difficult and it is not a discount they awarded themselves.

Which means two things follow. The first is that your income is the GROSS figure on the invoice, not the smaller amount that landed. If you declare only what arrived, you have understated what you earned, and you have quietly thrown away the credit.

The second is that the credit note matters more than most people think. When a client withholds, they should give you a certificate showing the amount and the reference. That certificate is the thing that lets you set the tax against your own bill. Without it you have a smaller payment and no evidence of why, which is the worst of both. Ask for it at the time. Chasing a finance department eleven months later for a document they filed and forgot is its own small career.

Clients outside Nigeria will not do any of this. A studio in Berlin has no obligation to Nigerian withholding tax and will simply pay you in full. That is not a problem. It just means nothing has been paid on your behalf, and the whole amount is yours to account for.

VAT: probably not yours to worry about, and here is the test

VAT is where most freelancers either panic unnecessarily or ignore something they should not. It is a separate tax from income tax, charged on what you sell rather than on what you keep, and the rate is 7.5 percent.

The part that matters to you is the small business threshold. Nigeria exempts businesses with an annual turnover below a stated figure, currently 25 million naira, from charging VAT and from the filing that goes with it. A freelancer earning well under that is not expected to add 7.5 percent to invoices, and not expected to file monthly returns.

Two things to watch, though. Turnover means everything you invoiced, not what you were left with after expenses, so the figure creeps up faster than people expect in a good year. And the threshold is about the total, not about any one client, so several small clients add up the same as one large one.

If you are anywhere near it, that is the moment to speak to somebody who does this for a living, because registration brings obligations that start immediately and are tedious to unwind. Where your clients are abroad, whether VAT applies at all to a service exported out of Nigeria is a genuinely technical question with a real answer, and it is worth paying an hour of somebody's time for it rather than guessing from a forum thread.

Which office, and when

This is the part the internet most often gets backwards, including in the question that prompted this article.

• •Your personal income tax, as a self employed individual, is filed with the internal revenue service of the STATE you live in. If you are in Lagos that is the Lagos State Internal Revenue Service, and so on. The annual return is generally due by the end of March, covering the year before.
• •FIRS is the federal body, and it is the right office for VAT, and for companies. If you have incorporated, the picture changes and the company files separately from you.

Getting this round the wrong way costs real time. People file nothing because they were waiting on a federal process that was never theirs, and then discover the state has been counting the years.

The record, which is the actual work

Every rule above is easy. What is hard, and what quietly turns a two hour job into a bad week, is that at the end of the year you need to be able to say four things and show your working.

1. 1.What you invoiced, gross, before anything was deducted.
2. 2.What was withheld by clients, with the certificate for each deduction.
3. 3.What it cost you to earn it, because you are taxed on profit rather than on receipts.
4. 4.What actually reached your bank account, and at what rate on what day.

A freelancer who can produce those four things has an easy conversation with an accountant and a short one with a revenue officer. A freelancer who cannot is guessing, and guessing tends to be expensive in one direction and risky in the other.

Where FendoMoney fits

We built FendoMoney because the two halves of this problem kept being sold separately. Somewhere to turn stablecoin into naira, and somewhere to keep the paperwork, were always different products, so the record was always assembled by hand afterwards from screenshots.

• •You raise an invoice against a client in USDT or USDC, with a description and a due date. Send it as a quote first if the work is not agreed yet, and turn it into the invoice with one tap when it is.
• •Your client opens a link in any browser. No app, no account. They see what they owe, what it is for, and the address to pay. We never contact them, and reminders about an overdue invoice go to you rather than to them.
• •A retainer client is set up once and the invoice is raised on schedule.
• •When the stablecoin lands, you sell it and the naira goes to your bank. The rate that sale executed at is recorded with it, which is the number you cannot reconstruct later from memory.
• •If a client withheld tax, you record the amount and the credit note reference against that invoice.
• •Your expenses go in a simple log: date, what it was for, how much, and a photo of the receipt.

Then, at the end of the year, the income statement is one export. It shows every sale with the rate it executed at, the gross you earned, the tax clients withheld with each certificate listed so you can chase the missing ones, the transfer charges taken on the way to your bank, your own recorded costs, and the net. It is the document an accountant can actually file from, rather than a screenshot of a wallet.

There is a second, deliberately shorter document for landlords and lenders. It shows what you earned over a period and how many payments there were. No transaction list, no client names, and none of your expenses, because somebody assessing you for a flat has no business reading your trading history.

One honest caveat

Our statement is a record of what passed through FendoMoney. It is not a record of your whole year. If you were paid into a wallet you kept, or through another platform, or in cash, none of that is in there, and nothing we produce can tell you your total income or what you owe on it. That is not a limitation we are apologising for, it is the honest boundary of what any platform can see, and a document that pretended otherwise would be worse than useless on the day somebody relies on it.

If you are a freelancer being paid in stablecoin and the paperwork has been the part you keep putting off, that is exactly the problem we are trying to make small.