Calculate Withholding Tax on payments to individuals and companies in Nigeria. Covers dividends, interest, rent, professional fees, contracts, royalties, and more.
| Payment Type | Company | Individual | Non-Resident |
|---|---|---|---|
| Dividends | 10% | 10% | 10% |
| Interest | 10% | 10% | 10% |
| Rent | 10% | 10% | 10% |
| Royalties | 10% | 5% | 10% |
| Commission | 10% | 5% | 10% |
| Professional Fees | 10% | 5% | 10% |
| Construction | 5% | 5% | 10% |
| Contract/Supply | 5% | 5% | 10% |
| Management Fees | 10% | 5% | 10% |
| Technical Fees | 10% | 5% | 10% |
| Directors' Fees | 10% | 10% | 10% |
Withholding Tax (WHT) in Nigeria is an advance payment of income tax that is deducted at source from payments made to individuals and companies. Governed by the Companies Income Tax Act (CITA), Personal Income Tax Act (PITA), and the WHT Regulations, it serves as a collection mechanism to ensure tax compliance and steady government revenue.
WHT rates vary depending on the type of payment and whether the recipient is a company, individual, or non-resident. For companies, most payment types attract a 10% WHT rate, with construction and supply contracts at 5%. For individuals, rates range from 5% (professional fees, commissions, construction) to 10% (dividends, interest, rent, directors' fees). Non-residents generally face 10% WHT on all payment types, though Double Taxation Agreements may reduce this.
It's crucial to understand that WHT is not a final tax for Nigerian residents — it's a credit against the recipient's ultimate income tax liability. When filing annual tax returns, companies and individuals can offset WHT credits received during the year against their computed tax. If WHT exceeds the final tax, the excess is refundable (in theory, though FIRS refund processes can be slow in practice).
For non-residents without a permanent establishment in Nigeria, WHT is typically the final tax on that income. This makes treaty planning important for foreign companies receiving payments from Nigeria — DTAs with countries like the UK, Netherlands, South Africa, and others may reduce WHT rates on dividends, interest, and royalties.
The payer is legally responsible for deducting and remitting WHT to FIRS within 21 days of deduction. Failure to deduct or late remittance attracts penalties of 10% of the amount not deducted/remitted, plus interest at the Central Bank of Nigeria's lending rate. The payer must also issue a WHT credit note to the recipient as proof of deduction.
No. WHT is an advance payment of income tax, not a separate tax. For residents, it's credited against the final tax liability. For non-residents without a Nigerian permanent establishment, it's typically the final tax on that income type.
The payer (person or company making the payment) is legally responsible for deducting WHT and remitting it to FIRS. The payer must issue a credit note to the recipient and file WHT returns with FIRS.
Yes. If Nigeria has a Double Taxation Agreement with the non-resident's country, the WHT rate may be reduced. Common treaty rates are 7.5%-15% for dividends and interest. The non-resident must provide a tax residence certificate to claim the reduced rate.