Withholding Tax Rates in Nigeria, by Transaction Type
Eleven categories, three rates. The rates aren't the hard part — deciding which category a payment belongs to is.
Cited against the NTA 2025 Act textIf you are looking up a withholding tax rate, you almost certainly already know how the arithmetic works: a percentage of the contract value, deducted at source, remitted to FIRS on the vendor's behalf. The rate table below settles that in ten seconds.
What the table cannot settle is the question that actually causes trouble — which of the eleven categories the payment in front of you belongs to. That decision is worth several percentage points, it is made by whoever raises the payment rather than by whoever reviews it, and it is the part of WHT that gets adjusted on review. Most of this article is about that.
- Eleven categories, three rates: 10%, 5%, 2.5%. The rates are not in dispute — which category a payment falls into often is, and that is where the money is lost.
- The most expensive boundary is management fees at 10% against consultancy at 5%. On a ₦1,000,000 payment that is ₦50,000 — and intra-group charges sit on that line constantly.
- WHT you deduct is due by the 21st of the following month, monthly. Late remittance carries a flat 10% penalty that is not pro-rated — being one day late and being ninety days late attract the same flat charge, plus interest on top.
The rate table
These are the FIRS reference categories Core Ledger's engine holds, in the order it holds them:
| What the payment is for | Rate | Withheld on ₦1,000,000 |
|---|---|---|
| Dividends | 10% | ₦100,000 |
| Interest | 10% | ₦100,000 |
| Royalties | 10% | ₦100,000 |
| Rent (corporate) | 10% | ₦100,000 |
| Management fees | 10% | ₦100,000 |
| Directors' fees | 10% | ₦100,000 |
| Professional services | 5% | ₦50,000 |
| Consultancy / Technical services | 5% | ₦50,000 |
| Supply of goods | 5% | ₦50,000 |
| Construction (resident) | 2.5% | ₦25,000 |
| Construction (non-resident) | 5% | ₦50,000 |
Three rates across eleven categories. 10% covers 6 categories, 5% covers 4 categories and 2.5% covers 1 category. There is no general default: a business that withholds 5% on everything because 5% feels typical will under-deduct on six of the eleven and over-deduct on one.
Find the rate, and the trap next to it
Pick what the payment is for. Alongside the rate, each category carries the one it is most often confused with and what that confusion costs on the same ₦1,000,000.
Typically covers: Fees for managing a business, or a part of one, on someone's behalf.
The single most expensive boundary here. Advising a business is consultancy at 5%; running it, or part of it, is a management fee at 10%. Intra-group charges sit on this line constantly and are the ones most likely to be reviewed.
The rates are the FIRS reference schedule and are not a matter of opinion. Which category a given payment falls into often is — these descriptions are what each category typically covers, not a legal test. Where a contract spans two of them, the deduction follows what was actually delivered rather than what the invoice is headed.
The three boundaries that actually cost money
Nine of the eleven categories are unambiguous in practice. Three pairs are not, and between them they account for most WHT adjustments:
Management fees (10%) against consultancy (5%). Advising a business is consultancy; running it, or a function of it, is management. The distinction is what was delivered, not what the engagement letter is called — and a single contract can genuinely contain both, in which case one rate across the whole invoice is wrong for part of it. Intra-group service charges live on this line.
Supply of goods (5%) against resident construction (2.5%). Supply-and-install contracts straddle it exactly. An undifferentiated invoice gets one rate applied to both halves, and it will be wrong for one of them in whichever direction you pick.
Directors' fees (10%) against payroll. The trap here is not a neighbouring category, it is a different tax. A director who is also an employee draws salary, and salary goes through PAYE — not withholding tax. Fees for serving in the office of director are what belongs here.
Residence changes the rate on identical work
Construction is the one place on this table where the same work carries two different rates depending on who does it: 2.5% for a resident contractor, 5% for a non-resident one. Nothing about the building changes. What changes is the counterparty.
Which makes residence a question to answer before the work is described rather than after — it is a fact about the vendor, so it belongs on the vendor record, not on the invoice. It is also the direction in which an error is least recoverable: under-deduct from a non-resident contractor and the shortfall is yours to settle, with a counterparty who has no particular reason to be reachable when you find out.
Set the rate on the vendor, not on the invoice
Almost everything that determines the rate is a property of the counterparty and the standing relationship, not of the individual payment: what they supply, whether they are resident, whether they are exempt, and their TIN. Deciding it once per vendor, rather than once per invoice, removes the entire class of error where the same supplier is withheld at different rates by two different people in the same month.
Core Ledger models it that way: a vendor carries a WHT category, a default rate, an exemption flag with a reason recorded against it, and the vendor's TIN. New transactions inherit that, and the exceptions are the ones you touch. It also means an exemption has a stated reason attached to it rather than being an unexplained zero someone will have to reconstruct at year end.
When it's due
WHT runs on monthly periods. What you deduct in a calendar month is due by the 21st of the following month — deductions made in January are due on 21 February, and so on through the year.
The obligation is on the payer, and it is not conditional on anything the vendor does. You deducted the money; it is not yours; the deadline runs regardless of whether the vendor has chased you for a credit note or even noticed the deduction. This is the half of WHT that businesses find surprising, because the receivable side — the WHT their own customers withhold — behaves so differently.
What late remittance costs
The Nigeria Tax Administration Act 2025 sets one late-remittance regime covering withholding tax and PAYE: a flat penalty on the unremitted amount, plus interestNTAA 2025 s.65.
One honest caveat on the interest, because it affects any figure you are quoted including ours: s.65 specifies compound interest, but no compounding frequency has been published anywhere. Core Ledger computes simple, pro-rated interest across each rate period instead — the same shape as the pre-2026 formula it replaces — and says so rather than implying a precision that does not yet exist. Treat any interest projection on late WHT, from any source, as an estimate until the frequency is published.
The flat 10% is the part worth planning around. It does not grow with lateness, which means it lands in full on the first day — there is no such thing as being slightly late.
Credit notes run in both directions
Every business doing both sides of this is generating and consuming the same document:
- Issue one to every vendor you withhold from. It is their evidence for a credit against their own income tax. Withholding without ever issuing the note leaves a supplier carrying a deduction they cannot claim, which is a commercial problem long before it is a tax one.
- Collect one from every customer who withholds from you. That is your evidence, and the balance in WHT Receivable is only claimable to the extent you can support it. Chase them while the payment is recent.
The asymmetry to keep in mind is that these two never net off. What you withheld from vendors is remitted to FIRS in full on the 21st; what customers withheld from you is claimed against company income tax, in a different return, on a different timetable. The mechanics of that split are covered in VAT and WHT: what's the difference.
A working checklist
Set a WHT category and default rate on every vendor record, plus residence and TIN. Decide it once, not per invoice.
Record exemptions with a stated reason, never as a bare zero. A zero with no reason is indistinguishable from an omission at year end.
Split mixed contracts — supply and install, advice and management — before the invoice is entered rather than after. One rate across two kinds of work is wrong for one of them.
Check the residence of any construction contractor before applying 2.5%. It is the only thing separating that rate from double.
Diarise the 21st. The flat penalty lands in full on day one, so the deadline is genuinely binary in a way most tax deadlines are not.
Issue credit notes as part of the payment run, not as a quarterly clean-up. Your vendors' ability to claim depends on it.
Everything above is general information about published rules, not advice about a specific transaction. The rates are the same reference schedule Core Ledger's engine applies, and the table on this page is rendered from it rather than typed in — but which category a contract falls into is a judgement about that contract, and the ones worth getting right are exactly the ones worth asking a professional about.
The Core Ledger team tracks Nigerian tax legislation so the platform's compliance tooling — and this blog — stay current with it.