Compute, classify, or review Nigerian Withholding Tax (WHT) obligations payable by a business on its outgoing payments to suppliers, landlords, contractors, lenders, shareholders, professionals, or non-resident recipients.
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Accountant-authored. Written and published by Omolola Fasasi , an accountant approved on OpenAccountants. Their licence number (MB058950) is published on their profile, so you can check it against the register yourself. No second accountant has attested to this version yet. General reference material, not advice on your specific facts; don't file, pay, or take a position on it without a professional reviewing your situation.
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Every figure is drawn from this Guide and cited to its source.
Dividends — company recipient
10%CITA s 78
Interest — company recipient
10%CITA s 78
Royalties — company recipient
10%CITA s 78
Rent — company recipient
10%CITA s 78
Directors' fees — company recipient
10%CITA s 78
Construction contracts — company recipient
2.5%CITA s 78; Finance Act 2020
Consulting / professional fees — company recipient
5%CITA s 78
Management services — company recipient
5% or 10%CITA s 78
Commission / agency fees — company recipient
10%CITA s 78
Dividends — individual recipient
10%PITA s 69
Interest — individual recipient
10%PITA s 69
Royalties — individual recipient
10%PITA s 69
Construction contracts — individual recipient
5%PITA s 69
Consulting / professional fees — company recipient
5%CITA s 78
WHT remittance deadline
21st day of month following deductionCITA s 78(3)
WHT- small company exemption
Small companies exempt from WHT deduction on transactions ≤₦2M/month and on payments to their suppliers. Must be added.
Critical rule (Regulation 4, WHT Regulations 1997)
WHT must be deducted by the payer at the time of payment OR when the liability is credited in the books — whichever comes first. The base is the gross amount excluding VAT. Where VAT applies (currently 7.5%), strip it before computing WHT.Regulation 4, WHT Regulations 1997
Critical rule (2024 FIRS Information Circular)
Small companies (turnover ≤ ₦25m) and individuals making payments below specified de-minimis thresholds (typically ₦10,000 per transaction or ₦25,000 in a month to the same recipient for services) are NOT required to deduct WHT on those payments. Verify the current threshold before applying.2024 FIRS Information Circular
intro
Refuse to compute WHT without ALL of the following:
R-NG-WHT-1
PAYE on employment incomeOut of scope — route to ng-paye.
R-NG-WHT-2
VAT withholding by listed government MDAs or oil & gas operators (7.5% VAT WHT)Distinct from income-tax WHT; route to ng-vat-return.
R-NG-WHT-3
Capital Gains Tax withholding on share disposals (10% CGT, S.I. 2022 No. 6)Separate CGT regime; refer to a Nigerian tax practitioner.
R-NG-WHT-4
Upstream petroleum royalty mechanics (NUPRC royalty, gas flare penalty, signature bonus)Specialist domain — refer to a petroleum tax specialist.
R-NG-WHT-5
Treaty rate claim without a valid TRC dated before the tax pointDefault to non-resident statutory rate (10% etc.); treaty relief denied.
R-NG-WHT-6
Sales of goods in the ordinary course of businessNOT subject to WHT under WHT Regs 1997 — confirm with payer and refuse to over-withhold.
R-NG-WHT-7
Bespoke FIRS / SIRS administrative concessions or rulingsCannot rely on private rulings without sight of the actual letter — refuse and request the document.
R-NG-WHT-8
NTA 2025 transitional questions covering periods straddling 31 Dec 2025 / 1 Jan 2026Implementing regulations TBC; refuse to commit to post-1-Jan-2026 mechanics until FIRS publishes the WHT Schedule.
R-NG-WHT-9
Multi-jurisdictional split between FCT (FIRS) and a State (SIRS) for the same payerEach agency claims residency on different tests — refer to a Nigerian practitioner.
R-NG-WHT-10
WHT on intra-group reimbursements without supporting invoicesLikely re-characterisable as service fee — refuse and request the underlying contracts.
Statutory basis
WHT is imposed by section 78 (and ss. 79–82) CITA (companies) and section 69 (and ss. 70–74) PITA (individuals and unincorporated bodies). Specific rates and procedures are prescribed by the Withholding Tax (Companies and Persons other than Companies) Regulations 1997 (S.I. No. 28 of 1997) as amended, supplemented by FIRS Information Circulars (most recently the 2024 update consolidating earlier practice).CITA s 78-82; PITA s 69-74; Withholding Tax (Companies and Persons other than Companies) Regulations 1997 (S.I. No. 28 of 1997)
Tax base excluding VAT
WHT is computed on the gross contract value or invoice amount excluding VAT. If the invoice is gross-of-VAT at 7.5%, strip VAT first: base = invoice / 1.075. Reimbursements of third-party expenses are excluded from the base only if the supporting invoices are in the name of the payer; otherwise included.
De minimis exemption
Per the 2024 FIRS Information Circular, small companies (turnover ≤ ₦25m) are not required to deduct WHT on their outgoing payments. Additionally, individual payers and small businesses are not required to deduct WHT on payments below the de minimis (typically ₦10,000 per transaction, or aggregate ₦25,000/month per recipient for services). The recipient remains liable for income tax on the gross amount — the exemption is from the withholding obligation, not the underlying tax.2024 FIRS Information Circular
WHT credit against liability
WHT deducted from a resident is generally a credit against the recipient's CIT or PIT liability in the year of assessment in which the income arose. The recipient claims the credit by presenting the FIRS WHT Credit Note (electronic, issued via TaxPro-Max). Excess credits may be carried forward indefinitely or refunded in narrow circumstances.
Dividends final for residents
For dividends, WHT at 10% is final for resident shareholders — the dividend constitutes "franked investment income" and is not aggregated with other taxable income (CITA s. 80(3)). The same applies to bank/government interest earned by resident individuals (PITA s. 70(2)).CITA s. 80(3); PITA s. 70(2)
Final for non-residents passive income
For non-residents, WHT is final for passive income (dividends, interest, royalties) — the non-resident has no further Nigerian tax obligation on that stream. For active services and contracts, the non-resident may still need to file a Nigerian return if a PE exists.
intro
Payments by Production Sharing Contract (PSC) Operators and Joint Venture partners to contractors and sub-contractors attract WHT at FIRS-prescribed rates that differ from the general 5%:
PSC creditability and documentation
PSC WHT is creditable against the recipient's CIT or PPT (Petroleum Profits Tax) liability. Documentation must reference the specific PSC contract number and FIRS PSC reference.
2.5% reduced rate scope
The 2015 amendment to the WHT Regulations reduced the rate on building, construction, and related activities from 5% to 2.5% for residents, in response to industry representations on cash-flow pressure. The reduced rate covers civil engineering, construction works, painting, plumbing, and electrical installation when integral to building works. Pure consultancy on a construction project (architects, quantity surveyors as standalone fees) remains at 5% professional fees, NOT 2.5%.2015 amendment
Treaty relief requirements
Treaty relief requires: A valid Tax Residence Certificate (TRC) from the recipient's home tax authority, dated before the tax point. The recipient must be the beneficial owner of the income (not a conduit). The TRC must be submitted to FIRS via TaxPro-Max when remitting WHT. Without a valid TRC at the tax point, the default statutory rate applies. The non-resident may in theory claim a refund post-payment, but this is administratively difficult.
TBC under NTA 2025 implementing regulations
Until FIRS publishes the WHT Schedule and the implementing regulations under NTA 2025, do NOT commit to post-1-January-2026 mechanics. Flag transitional issues and refer.
SEP digital services WHT
The Companies Income Tax (Significant Economic Presence) Order 2020 brought non-resident digital service providers into the Nigerian tax net where they have SEP (turnover ≥ ₦25m from Nigerian customers, or use of a .ng domain, or local payment infrastructure). For B2B digital service payments to non-residents under SEP, the Nigerian payer must withhold at 10% unless reduced by treaty. NTA 2025 is expected to formalise this regime.Companies Income Tax (Significant Economic Presence) Order 2020
Tax point trigger
The WHT obligation arises at the earlier of (Regulation 4, WHT Regulations 1997): Date of payment to the recipient, or Date the cost is accrued / liability credited in the payer's books, or Date of the supplier's invoice (where the payer recognises the liability on receipt). For accrual-basis companies, the tax point is typically the invoice date or the date the liability is booked in payables.Regulation 4, WHT Regulations 1997
Companies remittance deadline
Companies and corporate payers (CITA s. 78): remit by the 21st day of the month following the month of deduction, to FIRS via TaxPro-Max.CITA s. 78
Individual payers remittance deadline
Individual payers and unincorporated bodies (PITA s. 69): remit by the 10th day of the month following the month of deduction, to the relevant State Internal Revenue Service (SIRS, e.g. LIRS for Lagos) where the payer is resident, OR to FIRS where the payer is in the FCT (Abuja) or is a federal-charge entity.PITA s. 69
Remittance schedule details
The remittance is made via TaxPro-Max (FIRS) or the State portal (LIRS eTax for Lagos, etc.) with a schedule of deductees listing for each: recipient TIN, recipient name, invoice number, gross amount, WHT rate, WHT amount, and nature of payment.
WHT Credit Note issuance
Upon successful remittance and reconciliation, FIRS issues an electronic WHT Credit Note to each recipient, in PDF format, downloadable from TaxPro-Max. The Credit Note shows the recipient's TIN, the payer's TIN, the period, the gross amount, the WHT rate, the WHT amount, and a unique reference number. The recipient attaches the Credit Note(s) to its annual CIT/PIT return as evidence of the tax credit.
Late remittance penalty
Late remittance: penalty of 10% of the tax due plus interest at the CBN Monetary Policy Rate (MPR) plus a spread, per CITA s. 82.CITA s. 82
Failure to deduct penalty
Failure to deduct: the payer becomes personally liable for the unpaid WHT plus penalty and interest — the recipient is not pursued.
Failure to file return penalty
Failure to file the WHT return / schedule of deductees: administrative penalty of ₦25,000 (companies) per month or ₦5,000 (individuals) per month.
Failure to issue credit notes
Failure to issue WHT Credit Notes: recipient may claim against the payer directly under common-law breach of regulatory duty.
Annual reconciliation process
There is no separate annual WHT return for the payer beyond the monthly schedules. The annual CIT return (Form CIT) and the annual PIT return (Form A) of the recipient reconciles WHT credits claimed against gross income reported. FIRS automatically cross-matches credits claimed against credits issued via TaxPro-Max — mismatches trigger audit queries.
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
Reviewed against the cited tax authorities by Omolola Fasasi on 2026-06-21.
Items flagged for further clarification are tracked separately and excluded here.
This block is generated from verified skill_facts — edit the facts, not the prose.
Section 1 Quick reference field table
| Field | Value |
|---|---|
| Country | Federal Republic of Nigeria |
| Tax covered | Withholding Tax (WHT) — advance income tax collected at source on specified payments |
| Currency | Nigerian Naira (NGN, ₦) — foreign-currency payments converted at the CBN official rate on the date of payment |
| Tax year | Calendar year (1 Jan – 31 Dec) for corporate WHT; assessment year aligned with FIRS practice |
| Current tax year | 2025 (transitional — NTA 2025 takes effect 1 January 2026) |
| Federal tax authority | Federal Inland Revenue Service (FIRS) — for companies, non-residents, and Abuja FCT residents |
| State tax authorities | State Internal Revenue Services (SIRS, e.g. LIRS in Lagos) — for individuals, partnerships, and unincorporated entities resident in the State |
| Filing portal | TaxPro-Max (https://taxpromax.firs.gov.ng) for FIRS WHT; State portals for SIRS WHT (e.g. LIRS eTax) |
| Remittance receipt | FIRS WHT Credit Note (electronic) — issued upon successful remittance and reconciliation |
| Company-payer deadline | 21st day of the month following the month of deduction |
| Individual-payer deadline (where applicable) | 10th day of the month following the month of deduction |
| Governing law (current) | Companies Income Tax Act (CITA) Cap C21 LFN 2004 (as amended), Personal Income Tax Act (PITA) Cap P8 LFN 2004 (as amended), Petroleum Profits Tax Act (PPTA), Capital Gains Tax Act, plus the Withholding Tax (Companies and Persons other than Companies) Regulations 1997 (S.I. No. 28 of 1997) as amended by FIRS Information Circulars (most recently the 2024 update) |
| Governing law (from 1 Jan 2026) | Nigeria Tax Act 2025 (NTA 2025) — consolidates WHT into a single tax-at-source Schedule (implementing regulations TBC) |
| Validated by | Verified by Omolola Fasasi (MB058950) on 2026-06-21 |
| Skill version | 1.0 |
Quick-look payment type to WHT rate table
| Payment type | Resident — individuals (PITA) | Resident — companies (CITA) | Non-resident (CITA, treaty-cap may apply) | Credit / Final? |
|---|---|---|---|---|
| Dividends | 10% | 10% | 10% | Final for residents (franked investment income); creditable / final for non-residents per treaty |
| Interest | 10% | 10% | 10% | Final for residents on bank/govt interest; otherwise creditable |
| Rent (land, building, equipment hire) | 10% | 10% | 10% | Creditable |
| Royalties | 5% | 5% | 10% | Creditable / final depending on category |
| Technical / professional services fees | 5% | 5% (10% if also a consultant fee) | 10% | Creditable |
| Management fees | 5% | 5% | 10% | Creditable |
| Consultancy fees | 5% | 5% | 10% | Creditable |
| Commissions | 5% | 5% | 10% | Creditable |
| All types of contracts (supply, construction) other than sales in the ordinary course of business | 5% | 5% | 5% (PSC: 10% per FIRS practice) | Creditable |
| Directors' fees | 10% | n/a (companies are not directors) | 10% | Creditable / final |
| Building, construction, and related activities | 2.5% (NEW rate per 2015 amendment) | 2.5% | 5% / 10% non-resident | Creditable |
| Hire of equipment (other than land/building) | 10% | 10% | 10% | Creditable |
| Charter — aircraft, ship, etc. | 10% | 10% | 10% | Creditable |
| Petroleum (PSC and JV operator payments to contractors) | n/a | 5% / 10% per PSC | 5% / 10% per PSC | Creditable against CIT / PPT |
Mandatory inputs table
| Input | Why it matters |
|---|---|
| Payer identity, TIN, and entity type (company, partnership, individual, government MDA) | Determines whether obligation arises, deadline (21st company / 10th individual), and remitting agency (FIRS vs SIRS) |
| Recipient legal name and tax residence | Determines resident (CITA/PITA) vs non-resident (CITA + treaty) rate |
| Recipient TIN (Tax Identification Number) | Required on the WHT Credit Note; without TIN the recipient cannot claim the credit |
| Nature of the payment (dividend, interest, rent, royalty, services, contract, commission, professional fees, directors' fees, etc.) | Determines applicable rate band |
| Whether payment is in the ordinary course of business (sales of goods) | Sales of goods in the ordinary course are EXEMPT from WHT; only services/contracts and passive income attract WHT |
| Gross contract value, VAT-exclusive | Base excludes VAT; strip 7.5% PPN-equivalent first if invoiced gross |
| Date of payment OR accrual, whichever is earlier | Tax point under Regulation 4 |
| For non-resident treaty rate: tax-residence certificate (TRC) from the recipient's home tax authority | Treaty relief denied if TRC not held at tax point |
| For PSC payments: whether payer is Operator, NNPC, or contractor; whether the contract is upstream or midstream | Determines 5% vs 10% PSC WHT under FIRS practice |
| For 2024 Circular de-minimis: payer turnover and per-transaction value | Determines whether small-company / small-payment exemption applies |
Refuse the engagement (explicit refusal, do not guess) in any of the following cases:
The current rate table for payments to Nigerian residents (both companies under CITA and individuals/partnerships under PITA) is:
Resident rates table
| Payment type | Rate |
|---|---|
| Dividends | 10% |
| Interest | 10% |
| Rent (land, building, plant, machinery, equipment) | 10% |
| Royalties | 5% |
| Technical service fees | 5% |
| Management fees | 5% |
| Consultancy fees | 5% |
| Professional fees (legal, accounting, engineering, etc.) | 5% |
| Commissions | 5% |
| Building, construction, and related activities | 2.5% (reduced from 5% under the 2015 amendment) |
| All contracts other than sales in the ordinary course of business | 5% |
| Hire of equipment (movables) | 10% |
| Charter (aircraft, ship, etc.) | 10% |
| Directors' fees (paid to non-employee directors) | 10% |
For payments to non-residents without a Nigerian permanent establishment, the default statutory rate is generally 10%, often capped or reduced by a Double Tax Treaty (DTT) with the recipient's country. The default non-resident table is:
Non-resident rates table
| Payment type | Default rate | Common treaty cap |
|---|---|---|
| Dividends | 10% | 7.5% (UK, Netherlands, Canada, China, Belgium, South Africa, etc.) |
| Interest | 10% | 7.5% (most treaties) |
| Royalties | 10% | 7.5% (most treaties) |
| Technical/management/consultancy service fees | 10% | 7.5% in some treaties; not specifically capped in others — default applies |
| All contracts (other than ordinary sales) | 5% | Per treaty — typically not capped (services article) |
| Directors' fees | 10% | Per treaty |
Nigeria has DTTs in force with: United Kingdom, Belgium, Canada, China, Czech Republic, France, Netherlands, Pakistan, Philippines, Romania, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, United Arab Emirates. Treaties signed but not yet ratified at the time of writing (e.g. Sweden 2021 protocol, UAE 2016, Cameroon) — verify status at FIRS before applying.
PSC WHT rates table
| Payment | Rate (PSC) |
|---|---|
| Service contracts to non-resident contractors (upstream PSC) | 10% (per FIRS Information Circular and PPTA practice) |
| Service contracts to resident contractors (upstream PSC) | 5% |
| Management / technical fees in PSC chain | 5% resident / 10% non-resident |
| Royalties paid by Operator to licensor | 5% resident / 10% non-resident |
Treaty rates common matrix
| Country | Dividends | Interest | Royalties |
|---|---|---|---|
| United Kingdom | 7.5% | 7.5% | 7.5% |
| Netherlands | 7.5% | 7.5% | 7.5% |
| Canada | 7.5% | 7.5% | 7.5% |
| France | 7.5% / 12.5% | 12.5% | 12.5% |
| China | 7.5% | 7.5% | 7.5% |
| South Africa | 7.5% / 10% | 7.5% | 7.5% |
| Singapore | 7.5% | 7.5% | 7.5% |
| Belgium | 7.5% / 12.5% | 12.5% | 12.5% |
| UAE (signed; verify ratification) | 7.5% | 7.5% | 7.5% |
The Nigeria Tax Act 2025 (assented June 2025) consolidates Federal tax laws into a single statute and replaces CITA, PITA, PPTA, VAT Act, and the WHT Regulations 1997 from 1 January 2026. Key WHT-related changes flagged for 2026 (subject to implementing regulations):
Consolidation of WHT into a single "Tax at Source" Schedule, replacing the 1997 Regulations.
Indications of revised rate ranges — possible reductions for technical/professional services to align with regional practice (Kenya 5%, Ghana 7.5%).
Express recognition of digital and cross-border services as a WHT category (currently grey under SEP — Significant Economic Presence Order 2020).
Streamlined single electronic WHT credit note via the consolidated FIRS portal.
Potential harmonisation of company-payer and individual-payer remittance deadlines (likely to consolidate to 21st of the following month for all payers).
TBC under NTA 2025 implementing regulations — Until FIRS publishes the WHT Schedule and the implementing regulations under NTA 2025, do NOT commit to post-1-January-2026 mechanics. Flag transitional issues and refer.
ABC Nigeria Ltd. engages XYZ Consulting Ltd. (resident, valid TIN) for management consultancy. Invoice ₦5,000,000 plus VAT 7.5% ₦375,000, total ₦5,375,000.
ABC Nigeria Ltd. pays a UK-resident company £100,000 for a software licence (treated as royalty). CBN rate on payment date: ₦1,950/£.
Scenario A — no TRC on file.
Scenario B — valid UK HMRC TRC dated before payment.
Software-as-royalty caveat. Nigeria's FIRS practice generally treats software licence and SaaS subscriptions as royalty (NTA 2025 expected to codify). Default to royalty treatment unless a robust legal opinion supports business-profits classification under Article 7.
NewCo Nigeria Ltd. declares ₦100,000,000 dividend to its parent OldCo Nigeria Ltd. (resident company, valid TIN).
When any input is ambiguous, missing, or contested, default to the conservative position that minimises the risk of under-withholding — under-withholding makes the payer personally liable (CITA s. 81/PITA s. 73), whereas over-withholding allows the recipient to claim a refund or credit.
Conservative defaults table
| Ambiguity | Conservative default |
|---|---|
| Recipient TIN not provided | Withhold at full statutory rate; do NOT issue Credit Note until TIN provided (recipient cannot claim credit without TIN, but obligation to remit remains) |
| Resident vs non-resident unclear | Treat as non-resident → apply non-resident rate (10% / 5% as applicable) |
| Service vs goods classification ambiguous | Treat as service → WHT applies; goods sales in ordinary course are exempt |
| Building/construction vs general contract | Apply 2.5% only with clear evidence of qualifying building/construction activity; otherwise 5% contracts |
| Treaty rate claim without original TRC | Apply default statutory non-resident rate (no treaty relief) |
| Royalty vs business profits (software/SaaS) | Treat as royalty → withhold per non-resident rate (10% / treaty) |
| Reimbursement of expenses unclear | Include in WHT base unless supporting invoices are in the payer's name |
| Mixed contract (goods + services) | Split if separately invoiced; if bundled, withhold on the full amount as services |
| Small-company de minimis status unverified | Apply WHT (do not assume exemption); the recipient can claim a refund if the exemption is later substantiated |
| CBN exchange rate not yet published | Use the most recent published CBN rate; do NOT use the parallel/black-market rate |
| Period straddles 31 Dec 2025 / 1 Jan 2026 | Apply 1997 Regulations to invoices dated up to 31 Dec 2025; flag post-1-Jan-2026 mechanics as TBC under NTA 2025 |
| Multiple object classifications possible | Pick the higher-rate code |
The general principle: withhold the higher rate when in doubt and let the recipient claim a refund or credit. A refund claim from FIRS is administratively heavy but available; making good an under-withholding from the payer's own pocket months after the supplier has been paid is much worse.
Primary legislation (current — 2025).
Future legislation (from 1 January 2026).
Subsidiary legislation.
FIRS Information Circulars.
Treaty network (as at 2025). Nigeria has DTTs in force with the United Kingdom, Belgium, Canada, China, Czech Republic, France, Netherlands, Pakistan, Philippines, Romania, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, and the United Arab Emirates. Always verify the specific treaty article text and ratification status before applying.
Portals.
ng-paye.md.ng-vat-return.md and nigeria-vat.md.ng-income-tax.md.intake.md.foundation.md.Skill version 1.0. Tax year 2025. Pending sign-off by a qualified Nigerian tax practitioner (CITN-registered or ICAN with tax practice licence). NTA 2025 implementing regulations TBC — do not file WHT returns or commit to post-1-January-2026 mechanics based solely on this skill without credentialed local review.
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