Withholding Tax (WHT)
WHT is tax deducted at source from certain payments in Nigeria and remitted to the tax authority on the recipient's behalf. It is an advance payment of tax, not an extra tax: the recipient offsets it against their final PIT or CIT liability.
Worked example
A client owes you ₦1,000,000 for consultancy and WHT applies at 5%. They pay you ₦950,000 and remit ₦50,000 to the tax authority, giving you a WHT credit note. When you file, that ₦50,000 counts against your tax bill, so you are not taxed twice.
Why the credit note matters
Without the credit note you cannot claim the offset, and you effectively pay the tax twice. Always request it at the time of payment, and keep it with your records.
Rates vary by payment type
Rates depend on the nature of the payment (professional services, rent, dividends, contracts) and on whether the recipient is a company or an individual. Confirm the correct rate for your service type before invoicing.
WHT is remitted by the 21st of the following month.
More Nigerian tax terms
- Company Income Tax (CIT)
- Consolidated Relief Allowance (CRA)
- Development Levy
- Direct assessment
- FIRS (Federal Inland Revenue Service)
- Input VAT
- Minimum wage tax exemption
- Output VAT
- PAYE (Pay-As-You-Earn)
- Personal Income Tax (PIT)
- Rent relief
- Tax Clearance Certificate (TCC)
- Tax Identification Number (TIN)
- Value Added Tax (VAT)
Tax that works itself out
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