Withholding tax, and what you actually get paid
Your customer deducts WHT before paying you. Work out how much, and what lands in your account.
- Invoice amount
- NGN 0.00
- Withholding tax (2%)
- −NGN 0.00
- You receive
- NGN 0.00
This is not money you have lost. Your customer remits it to the Nigeria Revenue Service against your tax and should give you a withholding tax credit note — keep it, because that is what you use to offset your own bill.
These are the common categories and this tool is for guidance only. The Schedule also covers directors’ fees, compensation for loss of office, entertainers and sportspeople, and winnings, and a treaty may give a non-resident payee a lower rate than the one shown — confirm your position with your accountant, the Nigeria Revenue Service or your State Internal Revenue Service.
Withholding tax in plain terms
- What is withholding tax?
- It is an advance payment of income tax. Instead of paying you in full and leaving you to settle your own tax later, your customer deducts a percentage and remits it to the tax authority on your behalf. It is not an extra tax and not a fee — it is your own tax, paid earlier.
- Is withholding tax money I have lost?
- No, and this is the part most often misunderstood. The amount deducted is credited against your income tax bill. Your customer should issue a withholding tax credit note — keep every one, because without it you cannot claim the credit and you will effectively pay the tax twice.
- What are the current WHT rates in Nigeria?
- For someone resident in Nigeria: 2% on the supply of goods you did not make, on services not listed separately, and on building, road, bridge and power plant construction; 5% on other construction work, on consultancy, technical, management and professional fees, and on commission and brokerage; and 10% on rent, dividends and interest. Royalties are 10% to a company and 5% to an individual. Someone outside Nigeria is charged more on the working categories — 10% rather than 5% on professional fees, for instance — while rent, dividends, interest and royalties are the same either way.
- Did the rates change recently?
- Yes, and it is why older figures are still circulating. The Deduction of Tax at Source (Withholding) Regulations 2024 took effect on 1 January 2025 and cut several rates to reflect thin margins — supply of goods fell from 5% to 2%, and consultancy, professional and commission fees fell from 10% to 5% for residents. Those regulations still stand under the 2025 tax Acts. If a customer is deducting 10% from your professional fee and you are resident here, that is the old rate.
- Why has more been deducted than the rate says?
- Most likely because the tax authority has no Tax ID for you. The regulations double the rate where the recipient has no Tax Identification Number, on everything except rent, dividends, interest and royalties — so a 5% professional fee becomes 10%. Registering for a Tax ID is the fix, and it is worth doing before the next invoice rather than after it.
- Do I have to deduct WHT from my own suppliers?
- Usually yes, if you are a business rather than a private individual — and failing to deduct can leave you liable for the amount yourself. There is an exemption for a small company paying ₦2,000,000 or less to one supplier in a calendar month, where that supplier has a valid Tax ID. Whether your business counts as small for this depends on definitions that changed with the 2025 Acts, so confirm it rather than assume it.
- Is WHT calculated before or after VAT?
- Before. Withholding tax applies to the value of the service or goods, not to the VAT on top of it. So on a ₦500,000 invoice with ₦37,500 VAT, WHT is worked out on the ₦500,000.
- When must it be remitted?
- Generally by the 21st day of the month following the deduction — to the Nigeria Revenue Service, which took over from FIRS under the 2025 reforms, for companies, and to the relevant State Internal Revenue Service for individuals.
The deduction is easy to work out. Remembering the credit note is not.
WadMaster keeps every invoice, what was paid against it, and what is still outstanding — so a short payment is something you notice rather than something you discover.
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