Your client pays ₦950,000 against a ₦1,000,000 invoice and says "we deducted WHT." Did you just lose ₦50,000? No, but you will if you don't collect the paperwork. This guide explains WHT from both sides: when clients deduct it from you, and when you deduct it from suppliers.
What is withholding tax?
Withholding tax (WHT) is an advance payment of income tax that the payer deducts from certain payments and sends to the tax authority on the recipient's behalf. It isn't an extra tax. The recipient later uses it as a credit against their own income tax.
What are the WHT rates in 2026?
WHT follows the Deduction of Tax at Source (Withholding) Regulations 2024. Common rates for Nigerian residents:
| Type of payment | Resident rate | Non-resident rate |
|---|---|---|
| Consultancy, professional, technical and management fees | 5% | 10% |
| Commission and brokerage | 5% | 10% |
| Supply of goods (non-manufacturer) | 2% | 5% |
| Construction of roads, bridges, buildings, power plants | 2% | 5% |
| Other construction | 5% | 10% |
| Rent, interest, dividends | 10% | 10% |
| Directors' fees | 15% | 20% |
Many companies still deduct 10% on professional fees out of habit, which was the old rate for some categories. If a client deducts more than the regulations require, raise it with them. The extra is your money tied up.
Who is exempt from deducting WHT?
A small company (and certain unincorporated businesses) doesn't have to deduct WHT from a supplier when:
- the supplier has a valid Tax Identification Number (TIN), and
- the transaction is ₦2,000,000 or less in the month.
This is one more reason to put your TIN on every invoice.
How do I invoice a client who deducts WHT?
Show it on the invoice so the client's accounts team pays the right amount the first time:
| Invoice line | Amount |
|---|---|
| Consultancy services | ₦1,000,000 |
| VAT (7.5%) | ₦75,000 |
| Total | ₦1,075,000 |
| Less WHT (5% of ₦1,000,000) deducted by client | −₦50,000 |
| Amount payable | ₦1,025,000 |
WHT is calculated on the amount before VAT, never on the VAT.
What is a WHT credit note and why does it matter?
When a client deducts WHT and remits it, the tax authority issues a WHT credit note (or the client gives you evidence of remittance). That document is your proof that the tax has been paid on your behalf. You use it to reduce your own income tax bill.
Without the credit note, the ₦50,000 is effectively lost. Keep a simple register of:
- the invoice number and client,
- the WHT amount deducted,
- whether you have received the credit note.
Chase missing credit notes every quarter. Clients are much more responsive shortly after payment than a year later.
When do I deduct WHT from others?
If your company isn't small, deduct WHT when you pay contractors, freelancers, consultants and suppliers for qualifying transactions, then remit it:
- To the NRS by the 21st of the following month for WHT on payments to companies.
- To the State Internal Revenue Service for WHT on payments to individuals, by the deadline set by the state.
Give the supplier evidence so they can claim their credit.
Example: You pay a freelance motion designer ₦300,000. Deduct 5% (₦15,000), pay them ₦285,000 and remit ₦15,000 to the relevant tax authority.
Check any invoice with the free VAT and WHT calculator.
How BizBooks handles WHT
- Choose 2%, 5% or 10% WHT on any invoice. BizBooks shows the total, the WHT the client will deduct and the balance payable.
- The Taxes page shows WHT deducted by clients as credits to collect.
- Payroll deducts WHT from contractors automatically and adds the remittance to your tax calendar.
Frequently asked questions
What is the WHT rate on consultancy fees in Nigeria?
5% for Nigerian resident recipients (companies and individuals) and 10% for non-residents, under the 2024 withholding regulations.
Is WHT calculated before or after VAT?
Before VAT. WHT applies to the value of the service or goods, not to the VAT charged.
Is withholding tax an extra tax?
No. It is an advance payment of the recipient's income tax, which they recover as a credit using their WHT credit notes.
Do small businesses have to deduct WHT?
Small companies don't have to deduct WHT from suppliers who have a valid TIN when the transaction is ₦2 million or less in the month.
When is WHT remitted in Nigeria?
WHT on payments to companies is remitted to the NRS by the 21st of the following month. WHT on payments to individuals goes to the State Internal Revenue Service.