Forming a US LLC from Nigeria

What no treaty actually means

A US income tax treaty mainly does two things: it can reduce the rate of US withholding on certain US-source payments, and it provides mechanisms for resolving which country taxes what. Without one:

• US-source payments that are subject to withholding are withheld at the statutory rate, with no treaty reduction to claim.
• There is no treaty tie-breaker if both countries consider you taxable on the same income.

And what it does not mean:

• It does not stop you owning a US LLC. There is no treaty requirement to form one.
• It does not make ordinary service income US-taxable. Whether income is US-source turns on where the work is done and whether you have a US trade or business, not on treaty status.
• It does not affect your EIN, your BOI report or your Form 5472 obligation.

So for a Lagos-based agency invoicing US clients for work done in Lagos, the practical effect of no treaty is usually none.

The part that is genuinely harder

Payment and banking providers maintain their own lists of countries they will serve, based on their compliance appetite rather than on tax law. Nigeria is served by fewer of them than most countries, and the list changes.

What follows from that:

• Check provider eligibility before you form, not after. An LLC you cannot attach a payment method to is an expensive lesson.
• Expect more verification, not less. Have your formation documents, EIN letter, operating agreement and a clear description of the business ready before you apply.
• A vague business description is the most common decline. "Consulting" is not one. What you sell, to whom, and how you get paid, is.
• A decline is provider-specific. It is not a judgement on your company and it does not mean the next one will refuse.

We will tell you which providers currently onboard founders resident in Nigeria before you pay us to form anything. If the honest answer for your case is that this will be difficult, you should hear it first.

And your Nigerian obligations

Owning a US company does not move your tax residence out of Nigeria, and it does not exempt you from Nigerian rules on foreign income or on foreign currency. Ask a Nigerian adviser how income from a foreign entity you control is treated for your own return, and what your bank expects when regular dollar receipts begin.

What is the same wherever you live

None of this changes with your passport. A US LLC owned by one non-resident files a pro-forma Form 1120 with Form 5472 attached every year, at a penalty starting from $25,000, even in a year it earned nothing. A multi-member LLC files Form 1065 instead. Every reporting company files a BOI report with FinCEN. And an EIN is available to you with no SSN, by fax or post rather than the instant online application.