Nigeria Withholding Tax Rates 2026: Rent, Dividends, Fees, Contracts and Commissions

Nigeria withholding tax, commonly called WHT, is tax deducted from certain payments before the recipient receives the balance. It is generally an advance payment of income tax, although the deduction can be a final tax for some non-resident transactions.

For example, if a Nigerian company owes a consultant ₦1,000,000 and the applicable WHT rate is 5%, the company deducts ₦50,000, pays ₦950,000 to the consultant and remits the ₦50,000 to the relevant tax authority.

The rules changed significantly under the Deduction of Tax at Source (Withholding) Regulations, 2024, which were gazetted as S.I. No. 34 of 2024 and implemented from 1 January 2025. The Regulations introduced lower rates for some low-margin activities, exemptions for certain small-business transactions and separate treatment for resident and non-resident recipients. These fiscal reforms guide the current framework.

The Nigeria Tax Act, 2025 commenced on 1 January 2026 under the Federal Government’s transition guidelines. Transactions and tax periods beginning from that date are administered under the new tax framework, while earlier periods remain subject to the previous laws.

What withholding tax means

WHT is not a separate tax added on top of the invoice. Regulation 5 of the 2024 Regulations states that a deduction at source is treated as an advance or final tax of the supplier and is not an additional cost of the contract or transaction.

The tax is deducted by the payer, often called the collecting agent. The recipient receives a WHT receipt that can support a claim for tax credit against income tax, where the deduction is not final tax.

Under the former statutory framework, the deduction obligation was supported by:

• Sections 79, 81 and 82 of the Companies Income Tax Act, Cap. C21, LFN 2004, as amended.
• Sections 69, 73 and 74 of the Personal Income Tax Act, Cap. P8, LFN 2004, as amended.
• Section 40 of the Federal Inland Revenue Service (Establishment) Act, 2007.

The 2024 Regulations were made under the powers in sections 81(9) of CITA, 73(6) of PITA and section 56 of the Petroleum Profits Tax Act. They specify the transactions, persons responsible, rates, exemptions, receipts and remittance deadlines.

From 2026, taxpayers also need to read these rules alongside the Nigeria Tax Act, 2025 and the Nigeria Tax Administration Act, 2025.

Nigeria WHT rates table

The table below focuses on the five transaction categories in this guide. “Resident” refers to a recipient resident in Nigeria, while “non-resident” refers to a recipient outside Nigeria or otherwise treated as non-resident under the applicable tax rules.

The 2024 Regulations also contain rates for interest, royalties, supplies, telecommunication tower services, directors’ fees, entertainment and gaming. This article concentrates on rent, dividends, professional fees, contracts and commissions because these are frequent sources of accounting and payment errors.

For a detailed rate lookup, the ToolBase Nigeria WHT Rate Checker can be used before preparing a payment schedule.

1. WHT on rent

Rent, hire and lease payments fall within the WHT regime where the payment is an eligible transaction under the applicable law. The commonly applied rate for rent is 10% for both resident and non-resident recipients.

The tax base is generally the gross rent or eligible amount payable, not the net amount after the tenant deducts service charges, repairs or other amounts. The agreement and invoice need to identify what is rent and what represents a separately documented reimbursement or out-of-pocket expense.

Rent calculation example

A company in Lagos pays annual office rent of ₦12,000,000 to a landlord.

• Gross rent: ₦12,000,000
• WHT rate: 10%
• WHT deduction: ₦12,000,000 × 10% = ₦1,200,000
• Amount paid to landlord: ₦10,800,000
• Amount remitted as WHT: ₦1,200,000

The WHT deduction does not eliminate the landlord’s obligation to account for any other applicable income tax. It represents tax deducted from the payment and credited according to the relevant rules.

Where a payment combines rent, facility management, security and maintenance, the accounting treatment depends on the contractual nature of each component. A single invoice describing the entire amount as “rent” can create classification uncertainty. A schedule that separates rent from genuine reimbursable expenses provides clearer support for the calculation.

2. WHT on dividends

Dividends paid by a Nigerian company generally attract WHT at 10%. This is commonly described as dividend withholding tax and is usually treated as a final tax on the dividend recipient, subject to the relevant law and any applicable exemption.

Dividend calculation example

A Nigerian company declares a dividend of ₦8,000,000 to a shareholder.

• Gross dividend: ₦8,000,000
• WHT rate: 10%
• WHT deducted: ₦800,000
• Net dividend paid: ₦7,200,000

The company records the gross dividend, the WHT payable and the net amount paid to the shareholder. The dividend voucher or WHT receipt should identify the shareholder, the gross dividend, the rate, the amount deducted and the relevant payment period.

The 2024 Regulations exempt certain distributions or dividend payments to a Real Estate Investment Trust or Real Estate Investment Company where the statutory conditions are satisfied. Regulation 10 also states that an exemption from deduction at source does not automatically create an exemption from the underlying income tax unless the enabling law provides for it.

Dividends are different from management fees, directors’ fees or repayment of shareholder loans. The legal and accounting character of the payment determines whether the dividend rate applies.

3. WHT on professional fees

Professional fees cover payments for services requiring specialised training and, in many cases, a professional licence. The 2024 Regulations definition includes services provided by accountants, architects, engineers, lawyers, surveyors, stockbrokers, tax practitioners and similar professionals. It also includes technical, management and consultancy services.

The rate is:

• 5% for a resident recipient, whether corporate or non-corporate.
• 10% for a non-resident recipient.

Professional fee calculation example

A Nigerian company receives an invoice of ₦2,500,000 from a resident accounting firm.

• Gross professional fee: ₦2,500,000
• WHT rate: 5%
• WHT deducted: ₦125,000
• Net amount paid: ₦2,375,000

The ₦125,000 is not calculated on profit earned by the accounting firm. It is calculated on the eligible gross payment, subject to the applicable rules and any permitted exclusion.

A second example involves a non-resident consultant:

• Gross consultancy fee: ₦4,000,000
• Non-resident WHT rate: 10%
• WHT deducted: ₦400,000
• Net payment: ₦3,600,000

Regulation 6(3) provides that tax deducted from payment to a non-resident is final tax unless the income is subject to further tax because the recipient has a taxable presence in Nigeria.

A contract that includes both professional fees and reimbursable travel expenses needs a clear breakdown. Regulation 10 exempts qualifying out-of-pocket expenses that are normally incurred directly by the supplier and distinguishable from contract fees. Unsupported lump-sum “expenses” may not receive the same treatment.

4. WHT on contracts

“Contract” is not a single WHT category with one universal rate. The transaction needs to be classified according to what the contractor is actually doing.

Construction rates

Construction calculation example

A Nigerian construction company receives a ₦30,000,000 contract to construct a small commercial building.

• Contract value: ₦30,000,000
• Resident construction rate: 2%
• WHT deduction: ₦600,000
• Amount paid to contractor: ₦29,400,000

If the same project is awarded to a non-resident contractor and the applicable rate is 5%:

• Contract value: ₦30,000,000
• Non-resident rate: 5%
• WHT deduction: ₦1,500,000
• Amount paid: ₦28,500,000

Other construction and related activities attract 5% for resident recipients and 10% for non-resident recipients under the Schedule to the Regulations. A contract for road construction therefore does not automatically receive the same treatment as a specialised installation, renovation or other construction-related engagement.

Supply contracts also require care. The Regulations generally apply a 2% deduction to eligible supplies of goods or materials other than goods manufactured or produced by the supplier. Exemptions include goods manufactured or materials produced by the person making the supply and qualifying across-the-counter transactions.

A company buying ₦10,000,000 of eligible goods from a trader may calculate:

• Gross supply value: ₦10,000,000
• WHT rate: 2%
• WHT deduction: ₦200,000
• Net payment: ₦9,800,000

This example does not apply where the goods are manufactured by the supplier or fall within another stated exemption.

5. WHT on commissions

Commission and brokerage fees paid to a resident recipient generally attract 5% WHT. Payments to a non-resident recipient generally attract 10%.

Commission calculation example

An insurance or marketing company earns a commission of ₦1,200,000 from a Nigerian client.

• Gross commission: ₦1,200,000
• Resident rate: 5%
• WHT deducted: ₦60,000
• Net commission paid: ₦1,140,000

For a non-resident agent:

• Gross commission: ₦1,200,000
• Non-resident rate: 10%
• WHT deducted: ₦120,000
• Net payment: ₦1,080,000

The Regulations exempt commission retained by a broker from money collected on behalf of a principal where the arrangement falls within the industry norm and the commission is properly identifiable. This is different from a commission separately invoiced to a customer as a service fee.

For example, if an agent collects ₦20,000,000 for a principal and retains a clearly documented ₦1,000,000 commission, the tax analysis may focus on the retained commission rather than the entire ₦20,000,000 collected for the principal. The agreement, invoice, settlement statement and accounting records need to support that distinction.

How to calculate Nigerian WHT

Use this basic formula:

[ \text{WHT} = \text{Gross eligible payment} \times \text{Applicable rate} ]

Then:

[ \text{Net payment} = \text{Gross eligible payment} - \text{WHT} ]

Worked multi-transaction example

A company makes the following payments in one month:

The total amount paid to recipients is ₦26,360,000, while ₦1,440,000 is deducted for remittance and credit documentation.

The ToolBase Nigeria WHT Simulator can help compare the gross amount, rate, deduction and net payment before the transaction is posted.

When to deduct and remit WHT

Regulation 6 provides that the obligation to deduct arises at the earlier of:

1. When payment is made.
2. When the amount due is otherwise settled.

For related-party transactions, deduction occurs at the earlier of payment or recognition of the liability.

The remittance deadline depends on the relevant tax authority:

• Amounts payable to the Federal Inland Revenue Service are remitted by the 21st day of the month following the month of payment.
• Other deductions payable to a State Internal Revenue Service are generally remitted by the 30th day of the following month.
• Capital Gains Tax and Pay-As-You-Earn deductions payable to a State Internal Revenue Service have a separate deadline of the 10th day of the following month.

For example, if eligible rent is paid on 15 July, the FIRS remittance deadline is 21 August. The relevant State Internal Revenue Service deadline for an applicable state-administered deduction is generally 30 August.

WHT receipts, TINs and records

The payer’s WHT schedule should contain:

• Payer’s name and Tax Identification Number.
• Recipient’s name, address and identification number.
• Nature of the transaction.
• Gross amount paid or payable.
• Applicable rate.
• Amount deducted.
• Calendar month of payment.
• Evidence of remittance.

Regulation 8 requires the person making the deduction to issue a receipt after remittance. The recipient can submit that receipt to the relevant tax authority as evidence for claiming the deduction as a tax credit.

For eligible non-passive transactions, the Regulations provide that the deduction may be doubled where the recipient has no TIN. A valid TIN, company RC number or other accepted identification details therefore form part of the payment-control process.

Small companies and equivalent unincorporated bodies may be exempt from the obligation to deduct WHT on a transaction valued at ₦2,000,000 or less in the relevant calendar month, provided the supplier has a valid TIN. The exemption is transaction-specific and does not automatically remove the recipient’s wider income-tax obligations.

Common WHT errors

The most frequent calculation problems arise from:

• Applying 5% to every contract without checking the type of construction.
• Applying the corporate rate to an individual professional.
• Treating a non-resident payment as a resident transaction.
• Calculating WHT on the net amount instead of the eligible gross amount.
• Deducting WHT from exempt manufactured goods.
• Treating reimbursable expenses as professional fees.
• Failing to obtain a WHT receipt.
• Remitting to the wrong tax authority.
• Using an outdated 10% commission rate for a resident recipient.
• Assuming a WHT exemption also exempts the underlying income from tax.

The Federal Inland Revenue Service has previously identified wrong rates, transaction misclassification and retention of deducted funds as causes of WHT arrears. Its public notice also explains the jurisdictional distinction between FIRS and State Internal Revenue Services.

Conclusion

Nigeria withholding tax rates depend on the payment type, recipient status, contract classification and any applicable exemption. For the five transactions covered here, the headline rates are generally 10% for rent and dividends, 5% for resident professional fees and commissions, 2% for qualifying resident road, bridge, building and power-plant construction, and higher rates for many non-resident payments.

This article is for educational purposes only and does not constitute professional advice. Consult a qualified professional for your specific situation.