M. A. Yusuff

You live in Nigeria You work as a consultant for a foreign company You have a valid contract They pay you USD into your domiciliary account So far, this is fine. Nothing illegal here. The problems start after the money lands. From the taxman’s point of view, three things matter: 1. Where the work is done → Nigeria 2. What the income is → taxable income 3. How the money moves after receipt. The new tax posture is obsessed with money trails, not intent. What happens when you withdraw USD and sell it on the black market? Let’s walk it slowly. Step 1: USD enters your dom account This is recorded. Banks report inflows. Taxman sees: “USD X entered this person’s account.” No issue yet. Step 2: You withdraw USD cash This is also recorded. Taxman sees: “USD X entered… then exited in cash.” At this point: there is no official conversion record no approved FX channel no verifiable rate This creates a documentation gap. Step 3: You sell the USD privately and deposit naira later This is where trouble begins. FIRS now sees: “Large naira deposit entered account later.” But there is no bank FX trail linking: the USD withdrawal to the naira deposit at an approved rate So, from the system’s perspective, this naira inflow looks like new income. Not “converted income.” Not “already earned income.” Just money that appeared. How the system can punish you 1. Double counting risk Worst case: USD inflow is treated as income Naira deposit is treated as another income You now have to prove they are the same money. Memory doesn’t count. Explanation doesn’t count. Only records count. 2. Expense & deduction denial If you claim expenses later (rent, data, tools, etc.): Taxman can say: “Show us the approved FX source for the naira you spent.” If you can’t: expenses may be disallowed taxable income increases tax bill increases You are taxed on paper profit, not real profit. 3. Estimated assessment If inflows don’t reconcile neatly: FIRS is allowed to: estimate your income assess tax based on lifestyle & bank data shift the burden to you to disprove it This is deadly if records are weak. 4. Suspicion of concealment (even if none exists) Repeated: cash withdrawals private conversions unexplained deposits can trigger: deeper reviews third party data requests aggressive questioning Remember that with the taxman, you are guilty until proven innocent!