Withholding tax in Nigeria: rates, who deducts, and when (2026)
Which WHT rate applies, what you take off a supplier's payment, when to remit it, and the exemption that lets small companies be paid in full.
Last checked . This is general information, not tax advice for your own business.
Withholding tax confuses people because it is not really a tax. It is an advance payment of someone else's tax that you are made to collect.
When you pay a supplier, you keep back a slice, send it to the tax office, and give the supplier a credit note for it. They use that note against their own tax bill. If you forget to deduct it, the tax office comes to you, not to them.
Who has to deduct
The duty falls on companies and other organisations, not on private individuals. That means:
- Limited companies and other corporate bodies
- Unincorporated businesses, partnerships and firms
- Government ministries, departments and agencies
- Tax-exempt bodies too: NGOs, charities and cooperatives
A person paying a builder to work on their own house, in a purely private capacity, is not a withholding agent. A business paying the same builder is.
The rates
These are the rates for payments to people and companies resident in Nigeria, under the Deduction of Tax at Source (Withholding) Regulations.
| What you are paying for | Company | Individual |
|---|---|---|
| Construction of roads, bridges, buildings, power plants | 2% | 2% |
| Other construction and related work | 5% | 5% |
| Professional, consultancy, technical and management fees | 5% | 5% |
| Commission and brokerage | 5% | 5% |
| Rent, hire or lease | 10% | 10% |
| Dividends and interest | 10% | 10% |
| Royalties | 10% | 5% |
| Supply of goods, where the supplier did not make them | 2% | 2% |
| Other services not listed above | 2% | 2% |
| Director's fees | — | 15% |
Two things catch people out here.
Construction is split. Building a road, a bridge, a building or a power plant is 2%. Other construction and related work is 5%. Which one a job falls under is worth getting right before you pay, not after.
No TIN means a higher rate. Where the supplier cannot give you a valid Tax Identification Number, the rate is doubled. This is the clearest reason to collect TINs from suppliers before you pay them rather than afterwards.
Work it out on the amount before VAT
This is the mistake that costs money. WHT is calculated on the value of the supply, not on the VAT-inclusive total.
A consultant invoices you ₦1,000,000 plus 7.5% VAT:
| Services | ₦1,000,000.00 |
| VAT at 7.5% | ₦75,000.00 |
| Invoice total | ₦1,075,000.00 |
| WHT at 5% on ₦1,000,000 | ₦50,000.00 |
| You pay the consultant | ₦1,025,000.00 |
| You remit to the tax office | ₦50,000.00 |
The consultant's invoice is settled in full at ₦1,075,000. They received ₦1,025,000 in cash and a credit note for ₦50,000. Both together clear the invoice — which is why your books must show the deduction and not simply record a short payment.
The exemption small companies miss
A small company can often be paid in full, with nothing deducted.
To count as small, a business needs annual turnover of ₦100 million or less and fixed assets of ₦250 million or less. Where it qualifies:
- Payments to it should not have WHT deducted, as long as the total paid to that supplier stays under ₦2 million in the calendar month and it has given a valid TIN.
- The same test works the other way round. A small company paying its own suppliers need not deduct, within the same monthly cap.
The exception that catches firms: professional, technical and consultancy services do not qualify. A law firm, an accountancy practice, an engineering or architecture firm still has WHT deducted from its fees however small it is.
If you are a small supplier being deducted anyway, it is usually because your customer does not know this rule or does not have your TIN on file. Both are worth fixing — the money is yours either way, but a credit note you have to chase is worth less than cash you already have.
When to remit
Two different deadlines, depending on who the tax belongs to:
- To the Nigeria Revenue Service (federal): by the 21st of the month after the deduction.
- To a State Internal Revenue Service: by the 30th of the month after the deduction.
Which one applies depends on the supplier. Broadly, deductions from companies go to the federal service and deductions from individuals and unincorporated businesses go to the state where they are resident.
This is why WHT has to be grouped by authority before you pay it over. A single month's deductions can be owed to two or three different offices on two different dates.
If you also charge VAT, note that the federal WHT date is the same 21st as your VAT return. One trip, two jobs.
Give the supplier their credit note
The deduction is only half of it. The supplier needs a withholding tax credit note showing what was taken off, or they cannot claim it against their own tax. To them, that piece of paper is the money.
Suppliers chase these constantly, and businesses that issue them promptly get a reputation for being easy to work with. It costs nothing.
The same applies in reverse. When a customer withholds tax from what they pay you, chase the credit note. Without it the deduction is simply money gone.
Keeping it straight
The administration is the hard part: the right rate on each payment, the base before VAT, the split between federal and state, the monthly deadlines, and a credit note for every supplier.
That is what MyBooks does with it. WHT comes off supplier payments at the rate for the transaction, grouped by authority so you can see what is owed to whom and when, with the deduction shown on the payment advice the supplier receives. On the money coming in, invoicing records what a customer actually paid and what they withheld, so the invoice clears properly instead of looking short.
This guide is general information about Nigerian withholding tax, not tax advice for your own business. Rates, thresholds and deadlines change. Confirm anything you are going to act on with the Nigeria Revenue Service, your state's revenue service or your accountant, and check the date at the top of this page to see when it was last reviewed.