Withholding Tax Rates in Nigeria: Complete WHT Guide

The complete Nigerian withholding tax rate table, who deducts, when to remit, and how to claim WHT credits or a refund.

Updated 2025-10-31 · NairaTax Tax Advisory Team · 14 min read

Introduction

Withholding Tax (WHT) is Nigeria's pay-as-you-earn system for non-salary income. When you pay a supplier, contractor, landlord, or consultant, you're required to deduct WHT (typically 5-10%) and remit it to NRS (formerly FIRS) or your State Internal Revenue Service (SIRS).

For the payer (company making the payment), WHT is a compliance obligation—get it wrong and face penalties of ₦25,000+ per transaction. For the payee (supplier receiving payment), WHT is a tax credit—you can offset it against your annual tax liability (and claim refunds if excess).

Yet WHT remains one of the most misunderstood aspects of Nigerian tax:

• What rate applies? (5%, 10%, or something else?)
• Is it final or creditable? (Do I need to file a return?)
• Who deducts? (Companies, individuals, government?)
• How do I claim a refund? (If WHT exceeds my actual tax liability)

This comprehensive guide answers every WHT question:

• Complete WHT rate table (services, interest, dividends, rent, royalties, etc.)
• Final vs. creditable WHT (when you need to file a return)
• Individual vs. company rates (different rates for different taxpayers)
• Non-resident WHT (10% default, reduced by Double Taxation Agreements)
• Form A issuance requirements (proof of WHT deducted)
• Refund claims for excess WHT (step-by-step process)
• New 10% WHT on T-bills (effective 2025—link to Article 1)

Part 1: Complete WHT Rate Table (2025)

Services and Professional Fees

Investment Income

Directors and Employment

Non-Resident Payments

Citation: The Nigeria Tax Act 2025 introduced a 10% WHT on short-term securities (Treasury Bills, commercial paper, bonds with maturity <1 year), effective January 1, 2025. This replaced the previous exemption, affecting both residents and non-residents.

Part 2: Final vs. Creditable WHT—What's the Difference?

Final WHT (No Further Filing Required)

"Final" means the WHT deducted is the full and final tax on that income—the payee does not need to file a tax return for that income.

Examples of Final WHT:

• Dividends: 10% WHT is final (no return required)
• Interest: 10% WHT is final (no return required)
• Rent: 10% WHT is final (if deducted by company tenant)

Why Final?

• Simplifies compliance (no annual return for passive income)
• Reduces NRS/SIRS workload (no need to process millions of small returns)

Example:

• You receive ₦5M dividends from Dangote Cement
• WHT deducted: ₦500,000 (10%)
• You receive: ₦4.5M
• Filing requirement: None (WHT is final tax)

Creditable WHT (Must File Return to Claim Credit)

"Creditable" means the WHT deducted is a prepayment of your annual tax liability—you must file a tax return and offset the WHT against your total tax due.

Examples of Creditable WHT:

• Professional fees: 5-10% WHT is creditable (file annual return)
• Consultancy fees: 5-10% WHT is creditable (file annual return)
• Directors' fees: 10% WHT is creditable (file annual return)

Why Creditable?

• Ensures taxpayers pay correct tax based on total income (not just one transaction)
• Allows for refunds if WHT exceeds actual liability

Example:

• You're a consultant (individual)
• You earn ₦10M consultancy fees
• WHT deducted: ₦500,000 (5%)
• Your actual tax liability: ₦1.5M (based on progressive rates)
• Filing requirement: File annual PIT return, pay additional ₦1M (₦1.5M - ₦500k WHT credit)

Refund Scenario:

• You're a small company (turnover ₦80M, exempt from CIT under 2025 rules)
• You earn ₦10M consultancy fees
• WHT deducted: ₦1M (10%)
• Your actual tax liability: ₦0 (exempt from CIT)
• Filing requirement: File annual CIT return, claim ₦1M refund

Part 3: Individual vs. Company Rates—Why the Difference?

Rate Differential

Why do individuals pay lower WHT rates (5%) than companies (10%)?

Rationale:

• Individuals have progressive tax rates (7-24%)—5% WHT is a prepayment toward their final liability
• Companies have flat tax rates (30%)—10% WHT is a prepayment toward their final liability

Example:

Individual Consultant:

• Consultancy fee: ₦10M
• WHT deducted: ₦500,000 (5%)
• Actual tax liability: ₦1.5M (based on progressive rates)
• Balance due: ₦1M (when filing annual PIT return)

Company Consultant:

• Consultancy fee: ₦10M
• WHT deducted: ₦1M (10%)
• Actual tax liability: ₦3M (30% CIT rate)
• Balance due: ₦2M (when filing annual CIT return)

Key Insight: WHT is not the final tax for services—it's a down payment. The final tax depends on your total income and applicable tax rate.

Part 4: Non-Resident WHT—10% Default, Reduced by DTAs

Standard Non-Resident Rates

When you pay a non-resident (foreign company or individual), you deduct 10% WHT on:

• Dividends
• Interest
• Royalties
• Professional fees
• Technical/management fees

Example:

• You hire a UK consultant (non-resident)
• Consultancy fee: $50,000 (₦80M at ₦1,600/$)
• WHT deducted: ₦8M (10%)
• Consultant receives: ₦72M

Double Taxation Agreements (DTAs)—Reduced Rates

Nigeria has DTAs with 15+ countries, including:

• UK (United Kingdom)
• South Africa
• Netherlands
• France
• Belgium
• Canada
• China
• Singapore
• UAE (United Arab Emirates)

DTAs typically reduce WHT rates:

Example: Nigeria-UK DTA

How to Claim DTA Benefits:

1. Non-resident obtains Tax Residency Certificate (TRC) from their home country (UK HMRC, Canada CRA, etc.)
2. Non-resident submits TRC to Nigerian payer (before payment)
3. Nigerian payer deducts reduced WHT rate (7.5% instead of 10%)
4. Nigerian payer issues Form A to non-resident (proof of WHT deducted)

Example (Continued):

• UK consultant obtains TRC from HMRC
• Submits TRC to Nigerian company
• WHT deducted: ₦6M (7.5% instead of 10%)
• Consultant receives: ₦74M (saves ₦2M)

Citation: KPMG Nigeria highlights that many Nigerian companies fail to request Tax Residency Certificates from non-resident payees, resulting in overpayment of WHT. This is a common compliance gap that costs businesses millions annually.

Part 5: Form A Issuance Requirements—Proof of WHT Deducted

What Is Form A?

Form A is the official certificate issued by the payer (company deducting WHT) to the payee (supplier/consultant) as proof that WHT was deducted.

Why It Matters:

• For payee: Form A is essential for claiming WHT credit when filing annual tax return
• For non-resident payee: Form A is required to claim Foreign Tax Credit in their home country (UK, Canada, U.S., etc.)

Without Form A:

• Payee cannot prove WHT was deducted
• NRS/SIRS may reject WHT credit claim
• Payee may pay tax twice (once via WHT, again when filing return)

Form A Requirements

Mandatory Fields:

1. Payer details: Name, TIN, address
2. Payee details: Name, TIN, address
3. Payment details: Amount paid, WHT rate, WHT amount
4. Transaction date
5. Payer's signature and stamp

Deadline for Issuance:

• Within 21 days of deducting WHT (same deadline as WHT remittance)

Penalty for Late/Non-Issuance:

• ₦5,000 per payee (per month of delay)

Example:

• You pay 10 suppliers in January 2025 (WHT deducted)
• You remit WHT by February 21, 2025 (deadline met)
• You issue Form A by February 21, 2025 (deadline met)
• If you issue Form A in March: ₦5,000 × 10 = ₦50,000 penalty

How to Issue Form A

Step-by-Step:

1. Login to NRS e-Services (https://www.firs.gov.ng) or your state tax portal
2. Navigate to: "WHT Returns" → "Form A Issuance"
3. Enter payee details:
   • Name, TIN, address
   • Payment amount, WHT rate, WHT amount
4. Generate Form A (system auto-populates payer details)
5. Download PDF (digitally signed by NRS/SIRS)
6. Send to payee (email or physical copy)

Pro Tip: Use accounting software (QuickBooks, Xero, Zoho Books) to auto-generate Form A when you pay suppliers—saves time and ensures compliance.

Part 6: Refund Claims for Excess WHT—Step-by-Step Process

When Can You Claim a WHT Refund?

Scenario 1: Small Company (Exempt from CIT)

• Your company has turnover <₦100M (exempt from CIT under 2025 rules)
• You earned ₦10M consultancy fees (₦1M WHT deducted)
• Your actual CIT liability: ₦0 (exempt)
• Refund due: ₦1M

Scenario 2: Individual with Low Income

• You're a consultant earning ₦5M/year
• WHT deducted: ₦250,000 (5%)
• Your actual PIT liability: ₦150,000 (based on progressive rates + reliefs)
• Refund due: ₦100,000

Scenario 3: Exporter (Zero-Rated VAT, Input VAT > Output VAT)

• You're an exporter (zero-rated sales)
• You paid ₦5M WHT on services (legal, consulting)
• Your actual CIT liability: ₦2M
• WHT credit: ₦5M
• Refund due: ₦3M

Citation: PwC Nigeria notes that WHT refund claims are common for SMEs under the ₦100M CIT exemption threshold, but many fail to claim refunds due to lack of awareness or fear of audits. The refund process, while slow, is legitimate and should be pursued.

How to Claim a WHT Refund

Step-by-Step:

1. File annual tax return (CIT or PIT) showing:
   • Total income
   • Tax computation
   • WHT credits (attach all Form A certificates)
   • Refund position (WHT credits > tax liability)
2. Submit supporting documents:
   • All Form A certificates (proof of WHT deducted)
   • Bank statements (proof of income received)
   • Invoices/contracts (proof of transactions)
3. NRS/SIRS reviews (audit may be triggered if refund >₦5M)
4. Approval: 30-90 days (sometimes longer)
5. Payment to your bank account

Processing Time:

• Small refunds (<₦1M): 30-60 days
• Large refunds (>₦5M): 90-180 days (audit likely)

Reality Check: Refunds can be slow (6-12 months in some cases). Plan cash flow accordingly.

Common Refund Rejection Reasons

1. Missing Form A Certificates

• Issue: You claim ₦1M WHT credit but only attach Form A for ₦600k
• Result: NRS/SIRS approves ₦600k refund, rejects ₦400k

Fix: Keep all Form A certificates. If lost, request duplicate from payer.

2. Mismatched TINs

• Issue: Form A shows TIN 12345678, but your return shows TIN 87654321
• Result: NRS/SIRS rejects refund (cannot verify WHT was deducted for you)

Fix: Ensure Form A has your correct TIN. If wrong, request corrected Form A from payer.

3. Unverifiable Transactions

• Issue: You claim WHT on ₦10M consultancy fee, but no contract/invoice provided
• Result: NRS/SIRS suspects fraud, rejects refund

Fix: Attach all supporting documents (contracts, invoices, bank statements).

4. Payer Did Not Remit WHT

• Issue: Payer issued Form A but never remitted WHT to NRS/SIRS
• Result: NRS/SIRS rejects refund (no WHT received)

Fix: Verify payer's WHT remittance before accepting Form A. Check NRS/SIRS portal (some states allow verification).

Part 7: New 10% WHT on T-Bills (2025)—What Changed?

Pre-2025: T-Bills Were Exempt

Old Rule:

• Treasury Bills (T-bills), commercial paper, and bonds with maturity <1 year were exempt from WHT
• Investors received full interest (no deduction)

Rationale: Government wanted to encourage short-term lending (fiscal policy)

2025: 10% WHT Now Applies

New Rule (Effective January 1, 2025):

• 10% WHT on interest from short-term securities (T-bills, commercial paper, bonds <1yr)
• Final tax (no further filing required)

Citation: The Nigeria Tax Act 2025 introduced a 10% WHT on short-term securities, effective January 1, 2025. This replaced the previous exemption, affecting both residents and non-residents. The change is expected to generate ₦500 billion in additional revenue annually.

Example:

• You invest ₦50M in 91-day T-bills
• Interest earned: ₦2M (4% annualized)
• Pre-2025: You receive ₦2M (no WHT)
• 2025: You receive ₦1.8M (₦200k WHT deducted)

Impact on Investors:

• Reduced returns (10% less interest)
• Cash flow hit (especially for retirees relying on T-bill income)

Impact on Government:

• Increased revenue (₦500B/year)
• Reduced borrowing cost (T-bill rates may increase to compensate for WHT)

💡 Learn More: See our WHT on Short-Term Securities Guide for detailed examples and tax planning strategies.

Part 8: WHT Compliance Checklist for Payers

Monthly Obligations

☐ Identify qualifying payments (services, rent, interest, dividends, etc.)
☐ Calculate WHT (use correct rate: 2.5%, 5%, or 10%)
☐ Deduct WHT at source (pay supplier net amount)
☐ Remit WHT by 21st of following month (via NRS/SIRS portal)
☐ Issue Form A to each payee by 21st of following month
☐ Keep records (payment vouchers, Form A copies, remittance receipts)

Common Payer Mistakes

Mistake 1: Not Deducting WHT (Thinking It's Optional)

• Error: "My supplier is a small business—I don't need to deduct WHT."
• Correct: WHT is mandatory (regardless of supplier size)
• Penalty: Assessment + 10% penalty + interest

Mistake 2: Using Wrong Rate

• Error: Deducting 10% WHT on individual consultant (should be 5%)
• Correct: Check payee type (individual vs. company) and payment type
• Penalty: Supplier may dispute, NRS/SIRS may assess shortfall

Mistake 3: Not Issuing Form A

• Error: "I remitted WHT, so I'm compliant—I don't need to issue Form A."
• Correct: Form A is mandatory (₦5,000 penalty per payee if not issued)
• Impact: Supplier cannot claim WHT credit (may refuse future business)

Mistake 4: Late Remittance

• Error: Remitting WHT on 25th (4 days after 21st deadline)
• Penalty: ₦25,000 + 10% p.a. interest on unpaid amount

Part 9: WHT Compliance Checklist for Payees

Annual Obligations

☐ Collect all Form A certificates (from all payers)
☐ Verify WHT amounts (cross-check Form A against bank statements)
☐ File annual tax return (CIT or PIT) by deadline:

• PIT: March 31
• CIT: June 30
  ☐ Claim WHT credits (attach all Form A certificates)
  ☐ Pay balance (if WHT credits < tax liability)
  ☐ Claim refund (if WHT credits > tax liability)
  ☐ Keep records (Form A, tax returns, receipts—6 years)

Common Payee Mistakes

Mistake 1: Not Claiming WHT Credits

• Error: "I paid ₦1M WHT, but I didn't claim it on my tax return—I thought it was automatic."
• Correct: You must claim WHT credits (attach Form A to return)
• Impact: You pay tax twice (once via WHT, again when filing return)

Mistake 2: Losing Form A Certificates

• Error: "I lost my Form A—can I still claim WHT credit?"
• Correct: No Form A = No credit (NRS/SIRS rejects claim)
• Fix: Request duplicate from payer (may take weeks/months)

Mistake 3: Not Filing Return (Assuming WHT Is Final)

• Error: "I received ₦10M consultancy fees, 5% WHT was deducted—I don't need to file a return."
• Correct: Consultancy WHT is creditable (not final)—you must file annual PIT return
• Penalty: ₦50,000 + assessment + interest

Part 10: Frequently Asked Questions (FAQs)

Is WHT the same as income tax?

No. WHT is a collection mechanism for income tax—it's a prepayment (or final payment, depending on income type).

Analogy: WHT is like PAYE for non-salary income. Just as employers deduct PAYE from salaries, payers deduct WHT from services/investments.

Can I avoid WHT by structuring payments differently?

No—and it's illegal. Common schemes:

• Splitting payments to stay below thresholds (NRS/SIRS aggregates transactions)
• Paying in cash to avoid paper trail (illegal for amounts >₦100k)
• Paying to offshore accounts (still subject to WHT if Nigerian-source income)

Penalty: 300% of tax evaded + imprisonment (up to 5 years)

What if my supplier refuses to accept net payment (after WHT)?

Educate them:

• WHT is not your tax—it's their tax (you're just the collector)
• They can claim WHT credit when filing annual return (attach Form A)
• Gross-up (if you want to pay full amount): Pay extra to cover WHT

Example (Gross-Up):

• Supplier invoices ₦10M (wants to receive full ₦10M)
• Gross-up calculation: ₦10M ÷ (1 - 0.05) = ₦10,526,316
• You pay ₦10,526,316, deduct ₦526,316 WHT (5%), supplier receives ₦10M

Can I claim a refund if I overpaid WHT?

Yes—but only if you file annual return.

Example:

• You're a small company (turnover ₦80M, exempt from CIT)
• You paid ₦1M WHT on consultancy fees
• Your actual CIT liability: ₦0 (exempt)
• Refund due: ₦1M

Process: File annual CIT return showing refund position. NRS/SIRS reviews and refunds (30-90 days).

Part 11: Action Checklist

☐ Payers:

• Deduct WHT at source (use correct rate)
• Remit by 21st of following month
• Issue Form A to payees
• Keep records (6 years)
  ☐ Payees:
• Collect all Form A certificates
• File annual tax return (CIT or PIT)
• Claim WHT credits (attach Form A)
• Claim refunds (if WHT > tax liability)
  ☐ Use our tools:
• WHT Calculator - Compute WHT on various payment types
• PAYE Calculator - Compute PIT liability (to determine refund eligibility)
• CIT Calculator - Compute CIT liability (to determine refund eligibility)

Conclusion: WHT Is a Credit, Not a Cost

For too long, Nigerian taxpayers have viewed WHT as a cost—money lost to the government. But here's the truth:

WHT is a credit (for most income types):

• You can offset it against your annual tax liability
• You can claim refunds if WHT exceeds your actual tax
• It's a prepayment (not a penalty)

Key Takeaways:

✅ Know the rate: 2.5%, 5%, or 10% (depends on payment type and payee type)
✅ Final vs. creditable: Dividends/interest are final; services are creditable
✅ Form A is essential: No Form A = No credit
✅ Claim refunds: If WHT > tax liability (especially for SMEs under ₦100M exemption)
✅ Remit by 21st: ₦25,000 penalty + interest if late
✅ Use DTAs: Reduce WHT to 7.5% for non-residents (if applicable)

The Bottom Line: WHT compliance done right saves money (via refunds and credits) and avoids penalties (₦25k-₦100k per transaction). Use this guide, keep good records, and consult a tax advisor for complex situations.

Related Reading

• WHT on Short-Term Securities - New 10% WHT on T-bills (detailed guide)
• Diaspora Tax Guide - WHT for non-residents, DTAs, Foreign Tax Credit
• PAYE Deadlines - Tax calendar (WHT due 21st of each month)
• SME Tax Exemption - ₦100M CIT exemption (affects WHT refund eligibility)

Tools & Calculators

• WHT Calculator - Calculate WHT on various payment types
• Personal Income Tax Calculator - Compute PIT liability (to determine refund eligibility)
• Company Income Tax Calculator - Compute CIT liability (to determine refund eligibility)
• Tax Regime Comparison - Compare 2025 vs. NTA 2025 (proposed)

Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. WHT rules can be complex depending on the payment type, payee type, and applicable Double Taxation Agreements. Always consult a qualified tax advisor or chartered accountant for advice specific to your situation.