| What it is: |
It is a payment of tax on account to be applied as tax credit against the income tax liability of the year to which the income that suffered the deduction relates. It is deductible at the point of payment or when credit is taken whichever comes earlier for the specified activity. |
| Enabling Law: |
Sections 60, 61, 62 of Companies Income Tax Act and Sections 69 to 72 of Personal Income Tax Act 1993 and Gazette Extraordinary No 74 Vol. 84 Part B of 12th August, 1997
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| Who Pays it: |
Individuals who are either in employment or are running their own businesses under a business name or partnership and communities, families and any trustee or executor under any settlement, trust or estate deemed to be resident in the State at a particular year. |
| Who Deducts it: |
• Body corporate or unincorporated;
• Government Ministries, Departments or Agencies, Local Governments;
• Statutory bodies, Public Authorities, Institutions and Organizations. |
| Who Collects it: |
State Boards of Internal Revenue collect WHT taxes of:
• individuals and unincorporated bodies in their various states of residence;
Federal Inland Revenue Service collect WHT of:
• Limited and Public Liability Companies all over the country. |
| Method of Payment: |
Tax withheld shall be remitted within 30 days or the date the duty to deduct arises whichever is earlier. |
| Rates: |
See table of Applicable Rates below |
| Incomes exempted from WHT: |
• Where a manufacturer buys raw materials from a supplier of those products which the manufacturer uses in his production line;
• Where the manufacturer delivers its normal line of products to its distributors and agents for sale. |
| Offence and Penalties: |
• Failure to deduct WHT attracts a fine of 200% of the tax not withheld;
• Failure to remit withheld tax within the stipulated time attracts a fine of 200% of the tax withheld but not remitted. |
| TABLE OF APPLICABLE RATES (WITHHOLDING TAX) Withholding Withholding |
| Transaction type |
Tax rate for companies |
Tax rate for individuals |
| • All aspects of building construction and related activities |
5% |
5% |
| • All types of contracts other than sale and purchase of goods |
5% |
5% |
| • Consultancy services |
10% |
5% |
| • Management services |
10% |
5% |
| • Technical Services |
10% |
5% |
| • Commissions |
10% |
5% |
| • Rent (including equipment hire) |
10% |
10% |
| • Royalties, Director’s fees |
10% |
10% |
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