Withholding tax, and what you actually get paid
Your customer deducts WHT before paying you. Work out how much, and what lands in your account.
- Invoice amount
- NGN 0.00
- Withholding tax (5%)
- −NGN 0.00
- You receive
- NGN 0.00
This is not money you have lost. Your customer remits it to FIRS against your tax and should give you a withholding tax credit note — keep it, because that is what you use to offset your own bill.
These are the common rates and this tool is for guidance only. WHT covers categories not listed here, rates change, and treaty rates may apply to non-resident payees — confirm your position with your accountant, FIRS or your State Internal Revenue Service.
Withholding tax in plain terms
- What is withholding tax?
- It is an advance payment of income tax. Instead of paying you in full and leaving you to settle your own tax later, your customer deducts a percentage and remits it to the tax authority on your behalf. It is not an extra tax and not a fee — it is your own tax, paid earlier.
- Is withholding tax money I have lost?
- No, and this is the part most often misunderstood. The amount deducted is credited against your income tax bill. Your customer should issue a withholding tax credit note — keep every one, because without it you cannot claim the credit and you will effectively pay the tax twice.
- Is WHT 5% or 10%?
- It depends on what the payment is for and who is being paid. Contracts and supplies are generally 5%. Professional services, consultancy, commission and rent are generally 10% for companies, and several of those drop to 5% for individuals and unincorporated businesses.
- Is WHT calculated before or after VAT?
- Before. Withholding tax applies to the value of the service or goods, not to the VAT on top of it. So on a ₦500,000 invoice with ₦37,500 VAT, WHT is worked out on the ₦500,000.
- Who is responsible for deducting it?
- The customer making the payment. If you are the one paying a supplier, the obligation to deduct and remit is yours, and failing to do so can leave you liable for the amount plus interest.
- When must it be remitted?
- Generally by the 21st day of the month following the deduction — to FIRS for companies, and to the relevant State Internal Revenue Service for individuals.
The deduction is easy to work out. Remembering the credit note is not.
WadMaster keeps every invoice, what was paid against it, and what is still outstanding — so a short payment is something you notice rather than something you discover.
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