You can grant non-qualified stock options (NSOs) to local residents in Nigeria and there are no approvals to obtain from the local authorities before granting stock options.

There are foreign exchange regulations which make it practically impossible to remit funds required for paying the exercise price from Nigeria to the US. As a result, it’s recommended to allow the grantees to have the possibility to exercise their stock options by way of “cashless exercise” or “net exercise” (or to offer other types of incentives that don’t require payment of an exercise price, such as Stock Appreciation Rights (SARs).

NSO

• The grantee will be the only one responsible for reporting and paying the necessary taxes, unless the stock options are first granted by the issuing entity to the local employer, and then granted to the employees (which would be unusual).
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• At the time of exercise, the grantee will pay taxes on the spread (i.e. the difference between the fair market value of the shares at the time of exercise and the exercise price), which will be taxed as any employment income (at progressive income tax rates, ranging from 7 to 24%).
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• Any increase in value of the shares between the time of exercise of the stock options and the time of sale of the shares will be taxed as capital gain at a rate of 10%. The grantee will be the only one responsible for reporting this gain.

NSO

You can grant non-qualified stock options (NSOs) to local residents employed via EoR in Nigeria.

• The grantee will be the only one responsible for reporting and paying the necessary taxes, unless the stock options are first granted by the issuing entity to the local employer, and then granted to the employees, which would be very unusual in an employer of record (EoR) setting.

• At the time of exercise, the grantee will pay taxes on the spread (i.e. the difference between the fair market value of the shares at the time of exercise and the exercise price), which will be taxed as any employment income (at progressive income tax rates, ranging from 7 to 24%).
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• Any increase in value of the shares between the time of exercise of the stock options and the time of sale of the shares will be taxed as capital gain at a rate of 10%. The grantee will be the only one responsible for reporting this gain.

NSO

You can grant non-qualified stock options (NSOs) to local residents employed as contractors in Nigeria.

• The grantee will be the only one responsible for reporting and paying the necessary taxes. The company, won’t legally have anything to do vis-à-vis the local tax authorities.
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• The grantee doesn’t have to declare something to the local authorities before the grantee exercises his/her stock options.
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• At the time of exercise, the grantee will pay taxes on the spread (i.e. the difference between the fair market value of the shares at the time of exercise and the exercise price), which will be taxed as any professional income (at progressive income tax rates, ranging from 7 to 24%).
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• Any increase in value of the shares between the time of exercise of the stock options and the time of sale of the shares will be taxed as capital gain at a rate of 10%.