Withholding Tax in Nigeria: The 2026 Guide
Withholding tax in Nigeria is one of those things that only becomes urgent the moment a contractor asks why you docked their payment, or a big client sends back your invoice asking for their WHT credit note. If that’s where you are right now — this guide is for you.
Quick Answer
Withholding tax (WHT) is an advance deduction of income tax made at source by the person paying — not the person receiving. Under the Nigeria Tax Act 2025, WHT rates vary by service category — 10% for professional and consulting services, 5% for construction contracts with materials, and 2.5% for construction excluding materials, among others. When the specific service category is not listed, verify the applicable rate against current NRS regulations rather than guess.
What You’ll Need
To deduct and remit WHT correctly:
- The contract or invoice from your vendor/contractor
- Your vendor’s Tax Identification Number (TIN)
- Access to the Nigeria Revenue Service (NRS) e-filing portal
- Your company’s TIN and PAYE registration
Estimated cost: Filing is free. The deduction comes out of the payment you make.
Estimated timeline: Remittance is due by the 21st day of the month following the month of payment.
What Is Withholding Tax in Nigeria?
Withholding tax is not a separate tax — it’s an advance payment of income tax, deducted at the point of payment. The person who pays (the “withholding agent”) deducts WHT before handing money to the recipient. The recipient then uses that deduction as a credit against their final income tax bill.
Think of it this way: you hire a consultant for ₦500,000. You don’t pay them ₦500,000. You pay ₦450,000 and remit ₦50,000 directly to the NRS on their behalf. They get a WHT credit note from you — and use it to offset their tax later.
The obligation is yours as the payer. If you forget to deduct and remit, the penalty falls on you — not your vendor.
Who Has to Deduct WHT in Nigeria?
If your business pays for any of the following, you are required to deduct WHT before payment:
- Professional services (legal, consulting, accounting, medical)
- Construction and building contracts
- Director fees
- Rent and lease payments
- Royalties, dividends, and interest
- Transportation services
The NTA 2025 governs these obligations. For service categories not explicitly listed in your reference materials, write the applicable rate rather than assume — the NRS is the authoritative source for rate confirmation.
WHT Rates in Nigeria (2026)
Under the Nigeria Tax Act 2025, the following WHT rates apply to common payment categories: [SOURCE: NTA 2025]
| Payment Type | WHT Rate | Notes |
|---|---|---|
| Professional / consulting services | 10% | Legal, accounting, management consulting |
| Directors’ fees | 10% | Paid to board members |
| Rent payments | 10% | Commercial and residential |
| Interest, dividends, royalties | 10% | Each category |
| Construction (with materials) | 5% | Full contract value |
| Construction (excluding materials) | 2.5% | Labour-only contracts |
| Transportation services | 5% | Haulage, logistics |
| Other service categories | [VERIFY: rate against NTA 2025 / NRS current schedule] | Do not assume |
One tweetable truth: Forgetting to deduct WHT doesn’t make it disappear — it just means you’re now liable for it.
How to Calculate Withholding Tax in Nigeria
The maths is straightforward. Here’s how it works step by step.
Step 1: Confirm the Payment Category
Before you calculate anything, identify what type of service you’re paying for. A graphic designer invoicing you for a logo is professional services (10%). A building contractor with materials is construction with materials (5%). Getting the category right matters — the rates differ.
Step 2: Apply the Rate to the Gross Invoice Amount
WHT is calculated on the gross invoice amount — before VAT, after any agreed discounts.
Example:
Your Lagos-based legal firm sends an invoice for ₦1,000,000.
- WHT rate: 10% [SOURCE: NTA 2025]
- WHT deduction: ₦1,000,000 × 10% = ₦100,000
- Amount you pay the firm: ₦900,000
- Amount you remit to NRS: ₦100,000
Pro tip: VAT (7.5%) is calculated separately and is not subject to WHT. Don’t mix the two.
Step 3: Issue a WHT Credit Note
Once you’ve remitted, issue your vendor a WHT credit note. This is their proof of deduction — they need it to claim the credit against their annual tax. Don’t skip this step. Vendors take this seriously, and rightly so.
Step 4: File and Remit to the NRS
Log into the NRS e-filing portal (nrs.gov.ng) and submit your WHT schedule alongside remittance. Note: The Federal Inland Revenue Service has transitioned to The Nigeria Revenue Service — the new portal is nrs.gov.ng. [SOURCE: NRS]
Deadline: 21st day of the month following the month of payment. [SOURCE: NTA 2025]
Miss this and late payment penalties apply — plus interest.
Cost Breakdown
| Item | Cost | Notes |
|---|---|---|
| WHT deduction (consulting) | 10% of gross invoice | Remitted to NRS |
| WHT deduction (construction with materials) | 5% of gross invoice | Remitted to NRS |
| WHT deduction (construction, labour only) | 2.5% of gross invoice | Remitted to NRS |
| WHT credit note (to vendor) | ₦0 | You issue this yourself |
| NRS e-filing fee | ₦0 | Filing is free |
| Automated WHT on Lint | ₦500/user per Smart Payroll cycle (flat fee covers PAYE computation, pension, NHF, payslip, and remittance — disbursement fee is waived) | [SOURCE: Lint pricing] |
Or let Lint handle it. Lint’s Smart Payroll covers WHT auto-deduction and remittance on contractor payments — plus bank transfers to employees cost ₦40, or free if the employee has a Lint account. [SOURCE: Lint pricing]
Common Mistakes Nigerian Business Owners Make With WHT
1. Not Deducting at All
The most common mistake. You pay a consultant ₦2,000,000 gross. You don’t deduct WHT. The NRS audit arrives and they charge you the full WHT amount — plus penalties — because the obligation was yours from day one.
Fix: Every time you raise a payment for professional services, rent, or construction, your first question is: “Have I applied WHT?”
2. Deducting the Wrong Rate
Paying a haulage company 10% instead of 5% isn’t just a maths error — it creates a dispute with your vendor and a credit reconciliation problem at year-end.
Fix: Keep a copy of the NTA 2025 rate table on your desk (or use Lint’s automated WHT feature to apply the right rate automatically).
3. Missing the Remittance Deadline
You deducted but didn’t remit in time. The deadline is the 21st day of the month following the month of payment. [SOURCE: NTA 2025] Miss it and penalties stack up.
Fix: Calendar reminders. Or automate remittance entirely — that’s exactly what Lint’s WHT auto-remittance feature does.
4. Applying WHT to VAT
WHT applies to the net service value — not the VAT portion. Deducting WHT on the gross-inclusive-of-VAT figure means you’re over-deducting, which upsets vendors and creates reconciliation headaches.
5. Not Issuing Credit Notes
You deducted, you remitted — and then you forgot to issue the WHT credit note to your vendor. They can’t claim the tax credit without it. Some vendors will refuse to work with you again over this.
Fix: Issue the credit note on the same day you remit.
Does the Old FIRS Regime Still Apply?
The Nigeria Tax Act 2025 replaced the Personal Income Tax Act (PITA) effective 1 January 2026. [SOURCE: NTA 2025] The WHT framework was updated alongside this.
Many pre-2026 sources — including some FIRS pages and most blog content from 2024–2025 — still describe the old regime. Use only current NTA 2025 values when dealing with 2026-onward tax matters. [SOURCE: NTA 2025]
If you’re reading an old blog post or a PDF from 2024, double-check the rates before applying them. The NRS (formerly FIRS) portal at nrs.gov.ng is the live source.
Withholding Tax vs PAYE: What’s the Difference?
A lot of business owners mix these up.
| WHT | PAYE | |
|---|---|---|
| Who it applies to | Vendors, contractors, landlords, directors | Employees on your payroll |
| Who deducts | You (the payer) | You (the employer) |
| Rate | Varies by service type | Graduated bands from 0% to 25% [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025 Sixth Schedule] |
| Remittance deadline | 21st of following month [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] | 10th of following month [SOURCE: Locked regulatory facts — Nigerian Tax & Statutory Deductions (NTA 2025-aligned)] [SOURCE: NTA 2025] |
| Credit to recipient? | Yes — WHT credit note issued | No — it’s a final deduction |
The key rule: if someone is on your payroll, use PAYE. If they invoice you as a contractor or vendor, use WHT.
FAQs: Withholding Tax Nigeria
Q: What is withholding tax in Nigeria?
WHT is an advance payment of income tax deducted at source by the payer before remitting funds to a vendor, contractor, or service provider. Under the NTA 2025, rates vary by category — 10% for professional services, 5% for construction with materials, 2.5% for labour-only construction. [SOURCE: NTA 2025]
Q: Is WHT now 2% in Nigeria?
No. The standard rate for professional and consulting services remains 10%. Construction contracts excluding materials are 2.5% — that is likely where the “2%” figure comes from. Confirm specific rates against the NTA 2025 or the current NRS schedule. [SOURCE: NTA 2025]
Q: Who pays withholding tax in Nigeria — the buyer or the seller?
The payer (buyer) deducts and remits WHT. The recipient (seller/vendor) receives a net payment and gets a WHT credit note to offset their income tax liability. The obligation sits with you — the business making the payment.
Q: What is the new withholding tax rate in Nigeria in 2026?
Under the NTA 2025: professional/consulting services — 10%; directors’ fees — 10%; rent — 10%; dividends, interest, royalties — 10%; construction with materials — 5%; transportation — 5%; construction excluding materials — 2.5%. For categories not listed here, verify against the current NRS rate schedule. [SOURCE: NTA 2025]
Q: What happens if I don’t deduct WHT?
The liability doesn’t disappear. The NRS can assess the full WHT amount against your business — plus penalties and interest — because the withholding obligation was yours. Pay the vendor gross and forget to remit WHT, and you’ve just created a tax debt.
Q: Do I pay WHT on purchases of goods?
WHT in Nigeria is primarily transaction-based and applies to specified services and income streams, not straight goods purchases.
Q: How do I get a WHT credit note?
If you are the vendor and your client deducted WHT from your payment, you request a WHT credit note from them. This document proves the deduction was made and allows you to offset the amount against your annual tax bill.
How Lint Handles WHT for Your Business
Manual WHT tracking means spreadsheets, deadline calendars, and a nagging feeling you’ve missed something. Lint offers withholding tax auto-deduction and remittance on contractor payments as a live feature — built into the same workflow as your payroll and bank transfers. [SOURCE: Lint]
Smart Payroll is ₦500 per user and covers PAYE computation, pension, NHF, payslips, and remittance — with the disbursement fee waived. [SOURCE: Lint]
Every contractor payment goes through the right deduction. Every credit note gets generated. Every remittance deadline gets met. You focus on the work.
Start automating your WHT today → lint.finance
Related Tools
- Lint WHT Auto-Remittance → — Auto-deduct and remit WHT on contractor payments
- Lint Smart Payroll → — PAYE, pension, NHF, and payslips for your team
- NRS e-Filing Portal → — Official NRS WHT filing portal
Published: May 2026
Regulatory sources: Nigeria Tax Act 2025 (NTA 2025), Nigeria Revenue Service (nrs.gov.ng)
This post is for information purposes. For specific tax advice, consult a registered tax adviser or the NRS.
Leave a Reply