WHT on vendor payments: NTA 2025 rates and remittance guide

Your consultant sends you an invoice for ₦500,000. Your IT vendor quotes ₦2,000,000 for a system build. A management consulting firm invoices ₦1,500,000 for a strategy project. In each case, Nigerian tax law requires you — the payer — to deduct withholding tax (WHT) at source before making the payment and remit that tax to the Nigeria Revenue Service (NRS) on the vendor's behalf.

The concept is simple. The execution trips up Nigerian SMEs constantly: wrong rate applied, wrong remittance account, missed deadline, no credit certificate issued. This guide covers the complete picture: rates under the Nigeria Tax Act 2025, the step-by-step deduction, the 21st-of-month remittance, and what to do with the WHT credit certificate your vendor needs to recover their money at year-end.

What WHT is — and why you're the one paying it

WHT is a pay-as-you-earn mechanism on business income, collected at source by the entity making the payment. Rather than waiting for a vendor to voluntarily remit tax on their consulting income at year-end, the tax system intercepts it at the point of payment. The payer deducts the applicable rate from the invoice, remits to NRS, and issues a credit certificate the vendor uses to offset their own tax assessment.

It applies to specific transaction types only — not every invoice. The threshold trigger is the nature of the service or transaction, not the amount. A vendor invoice for ₦50,000 in professional fees is still WHT-applicable; a vendor invoice for ₦5,000,000 for office furniture is not (supplies are covered separately — see table below).

Who is the WHT agent? Companies — incorporated entities — are required to deduct WHT on qualifying payments. Individuals making similar payments are generally not required to withhold unless they are in a regulated profession or the NRS issues specific guidance. In practice: if you run a limited liability company, you are a WHT agent on all qualifying vendor payments.

NTA 2025 WHT rates — the complete table

The Nigeria Tax Act 2025, which took effect on 1 January 2026, made significant changes to PAYE, Development Levy, and capital gains. WHT rates were not among them. The same rates that applied under the Companies Income Tax Act (CITA) and Finance Act 2020 continue under NTA 2025 — the legal reference simply migrated to the new consolidated Act.

Transaction type	Resident rate	Non-resident rate
Professional services	5%	10%
Consultancy	5%	10%
Technical services	5%	10%
Contracts & supplies	5%	10%
Construction	5%	10%
Royalties	5%	10%
Rent	10%	10%
Management fees	10%	10%
Directors' fees	10%	10%
Commission	10%	10%
Dividends	10%	10%
Interest	10%	10%

Resident means the vendor has a Nigerian Tax Identification Number (TIN) and is resident in Nigeria. Non-resident means the vendor is based outside Nigeria — WHT on non-resident payments is the primary mechanism for collecting Nigerian tax from foreign service providers with no permanent establishment in Nigeria.

The 5%/10% split applies where the income type is one the NRS has designated as lower-risk or lower-margin (professional services, construction, technical work) versus those where the gross-to-profit ratio is higher (rent, management fees, commissions, investment income).

What NTA 2025 actually changed about WHT

The WHT rates themselves are unchanged. Three administrative changes are worth noting:

1. FIRS became NRS. The Federal Inland Revenue Service was renamed the Nigeria Revenue Service under NTA 2025. All WHT remittances that previously referenced FIRS now reference NRS. The payment channels (TCC-linked accounts, NRS tax portal) remain the same for now. Per Afriwise's 2025 review, the renaming is substantive — NRS was restructured with new sub-agencies — but operationally, the WHT remittance workflow is uninterrupted.

2. The consolidated legal basis. Pre-2026 WHT operated under a patchwork: CITA s.78 (companies receiving income), PITA s.69 (individuals), and multiple NRS information circulars. NTA 2025 consolidates the WHT framework under a single Act. The practical effect: if you receive an NRS audit query about a WHT deduction made in 2026 or later, you cite the NTA 2025, not the 1990 CITA + circulars patchwork.

3. Increased enforcement posture. NTA 2025 introduced harsher late-payment penalties (see below) and the Act explicitly extends NRS's audit reach to source-deduction agents. Since 2023, NRS has been more aggressive about desk audits of companies' vendor payment records. Missing WHT deductions surface as a gap in your audit trail — not just unpaid tax — because the vendor has no credit certificate to match.

Step-by-step: applying WHT to a vendor invoice

Scenario: A Lagos-based IT consultancy (resident, TIN-registered) invoices you ₦2,000,000 + 7.5% VAT for a software build.

Step 1 — Identify the transaction type. Software development: consultancy / technical services → 5% WHT.

Step 2 — Confirm resident or non-resident. Vendor is Lagos-registered, has a TIN → resident rate applies.

Step 3 — Compute WHT on the pre-VAT amount. WHT is always applied to the net (pre-VAT) amount, not the gross including VAT:

WHT = ₦2,000,000 × 5% = ₦100,000

Step 4 — Compute the net payable to the vendor.

Invoice: ₦2,000,000 (net) + ₦150,000 (VAT) = ₦2,150,000 gross Less WHT: − ₦100,000 Net payment to vendor: ₦2,050,000

The VAT is paid in full — you do not withhold VAT (that's a separate input VAT mechanism). You only withhold on the pre-VAT service charge.

Step 5 — Remit ₦100,000 to NRS and issue a credit certificate. The vendor receives ₦2,050,000 from you and a ₦100,000 WHT credit certificate. At year-end, they offset the ₦100,000 against their CIT or PIT assessment.

Professional services example:

Your legal firm invoices ₦500,000 for contract review. WHT = ₦500,000 × 5% = ₦25,000. You pay the firm ₦475,000 and remit ₦25,000 to NRS.

Rent example:

Office rent invoice for ₦1,200,000 per quarter. WHT = ₦1,200,000 × 10% = ₦120,000. You pay the landlord ₦1,080,000 and remit ₦120,000 to NRS.

Directors' fees are a common slip: a board fee of ₦500,000 per quarter triggers 10% WHT before payment. Many SMEs treat director compensation as payroll and miss the WHT obligation entirely — they are legally distinct.

Remittance: the 21st-of-month deadline

WHT deducted by companies must be remitted to NRS by the 21st of the month following the deduction. A payment made on 14 April → remittance due 21 May.

Individual payers (sole traders, professionals in personal capacity) face an earlier deadline: the 10th of the following month. In practice, almost all B2B transactions are company-to-company, so the 21st applies.

Where to remit: Via the NRS Self-Service Portal (taxpromax.gov.ng or the successor platform). You file a WHT return — listing each vendor, TIN, transaction type, gross amount, and tax withheld — and make an electronic payment to the NRS collection account. Retain the payment receipt and the return acknowledgement in your records.

What to file: A monthly WHT schedule listing vendor name, TIN, transaction type, gross amount, and WHT deducted. If you made no qualifying payments in a month, file a nil return anyway — the obligation to file exists regardless.

WHT credit certificates

After remitting, you must issue a WHT credit certificate to each vendor. This is the document they need to prove WHT was deducted on their income — without it, they pay tax twice (once via your deduction, again in their own assessment, with no relief).

The certificate must state:

• Your company name and TIN (the deducting agent)
• The vendor's name and TIN
• Transaction type and amount
• WHT rate and amount deducted
• Month of remittance and NRS reference number

NRS has been digitising certificate issuance via the TaxProMax portal since 2023. Best practice: issue the certificate within 7 days of remittance. Holding up credit certificates is a vendor-relations issue that frequently surfaces during procurement audits and supplier due-diligence reviews.

Late filing and non-deduction penalties

Under NTA 2025's penalty framework, late filing or non-remittance of WHT attracts:

₦100,000 for the first month of default + ₦50,000 for each subsequent month the failure continues

These penalties are not capped. A WHT remittance missed for six months accumulates ₦100,000 + (5 × ₦50,000) = ₦350,000 in penalties, plus interest on the outstanding tax at the prevailing NRS rate.

Non-deduction is treated separately. If an audit establishes that you paid a vendor without deducting WHT at all (not just a late remittance), you become personally liable for the undeducted tax — NRS can assess you for 100% of the tax that should have been collected, plus penalties, without crediting the vendor. You have a contractual claim against the vendor to recover it, but that's your problem, not NRS's.

Five mistakes Nigerian SMEs make on WHT

1. Applying WHT to the VAT-inclusive amount. WHT is on the pre-VAT service charge only. Applying 5% to ₦2,150,000 instead of ₦2,000,000 overstates the deduction and creates a reconciliation problem at year-end.

2. Treating all vendor invoices as WHT-applicable. Plain commercial purchases — office supplies, raw materials, finished goods — are not WHT-applicable (unless captured under the contracts & supplies category, which applies to supply contracts, not one-off purchases). Consult the rate table; don't apply WHT reflexively to every invoice.

3. Missing directors' fees. Director remuneration paid separately from payroll — board fees, sitting allowances — triggers 10% WHT. Many companies process these as expense claims and skip the deduction.

4. No TIN for the vendor. Without a TIN, you cannot remit to the correct NRS account or issue a valid credit certificate. Make it a procurement requirement: no TIN, no payment processing.

5. Failing to file on nil months. A nil WHT return is still a required filing. Missing a nil month creates a gap in your compliance record that looks like under-reporting on audit.

Summary

Item	Rule
Who deducts	Incorporated companies on qualifying vendor payments
5% transactions	Professional services, consultancy, technical, construction, contracts/supplies, royalties (resident)
10% transactions	Rent, management fees, directors' fees, commissions, dividends, interest; all non-resident types
WHT base	Pre-VAT amount only
Remittance deadline	21st of the following month (company agents)
Late filing penalty	₦100,000 (month 1) + ₦50,000/month thereafter
NTA 2025 change	Rates unchanged; legal basis consolidated under the new Act; NRS replaces FIRS

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