What is WHT?
Every time your company pays rent, contractors, consultants, dividends, or similar items, Nigerian law requires you to deduct tax at source and send it to the government on behalf of the recipient. You pay the supplier the net amount. You remit the deducted tax to FIRS or State IRS.
If you use the wrong rate or forget entirely, you (the payer) become personally liable for the shortfall plus penalties and interest, even if the supplier disappears.
Most Common WHT Rates You Will Actually Use (2025)
| Payment Type | Recipient Type | Standard Rate | Reduced Rate (valid 3-year TCC shown) | Remitted To | Notes & Examples |
|---|---|---|---|---|---|
| Rent (office, warehouse, residential) | Company or individual | 10% | No reduction | State IRS | Biggest trap for startups |
| Directors’ fees | Individual directors | 10% | No reduction | State IRS | Applies even to owner-directors |
| Professional / consultancy / management / technical services | Nigerian company | 10% | 5% | FIRS | Lawyers, auditors, IT firms, marketing agencies |
| Construction & building contracts | Company or individual | 5% | No reduction | FIRS | Office renovation contractors |
| Commission & agency fees | Company | 10% | 5% with TCC | FIRS | Sales agents, distributors |
| Dividends | Shareholders | 10% | No reduction | FIRS | When you finally distribute profit |
| Interest on loans | Companies | 10% | No reduction | FIRS | |
| Royalties | Companies or individuals | 10% or 5% | Depends | FIRS |
Real-Life Examples Every Business Owner Faces
Example 1: Office Rent in Lagos
- Annual rent invoice: ₦15,000,000
- Deduct 10% WHT = ₦1,500,000
- Pay landlord ₦13,500,000
- Remit ₦1,500,000 to Lagos State IRS before the 21st of the next month.
- If you pay the full ₦15m, LIRS will still chase you for the ₦1.5m plus penalties.
Example 2: Paying Your Auditor (Nigerian firm) Audit fee: ₦8,000,000 + ₦600,000 VAT = ₦8,600,000 gross
- With valid 3-year TCC → deduct only 5% = ₦400,000 → pay ₦8,200,000
- Without TCC → deduct 10% = ₦800,000 → pay ₦7,800,000
The auditor will rush to give you their TCC to save ₦400,000.
Example 3: Construction Contractor
- Invoice: ₦25,000,000
- Deduct flat 5% = ₦1,250,000
- Pay contractor ₦23,750,000
- Remit ₦1,250,000 to FIRS.
Example 4: Director’s Fees
- You vote yourself ₦5,000,000 as director’s fee
- Deduct 10% = ₦500,000
- Pay yourself ₦4,500,000 net
- Send ₦500,000 to State IRS.
Golden Rules to Save Money and Stay Safe
- Always ask Nigerian corporate suppliers for their valid 3-year TCC before payment. It instantly cuts WHT from 10% to 5%.
- Keep copies of every TCC you rely on. FIRS will demand them when you close the company.
- File returns and remit by the 21st of the following month. Late filing costs ₦25,000 + ₦5,000 per month.
- Issue WHT credit notes within 30 days so recipients can claim the credit.
Mastering WHT is simple once you know the rates and the TCC trick. Deduct correctly, ask for valid Tax Clearance Certificates to halve your withholding on services, file on time, and keep records. Do this, and you’ll save cash every month, avoid personal liability, and sail through FIRS clearance when you eventually close your company.