Withholding Tax in Nigeria: How the Rules Affect Your Invoices and Payments

You invoice a client for ₦500,000 and ₦475,000 arrives. The missing amount is usually not a mistake. It is withholding tax (WHT): the client deducted part of your payment and is meant to pay it to the tax authorities on your behalf, as an advance on your own tax.

Rules updated in 2024 changed who deducts WHT and when. They matter on both sides: to the supplier whose payment is reduced, and to the larger company whose finance team must deduct it and pay it over.

The 2024 regulations in brief

The Deduction of Tax at Source (Withholding) Regulations 2024 took effect on 1 January 2025. Three points matter most:

• Small companies are excused from deducting WHT on a transaction worth ₦2 million or less in the month, provided the supplier has a valid TIN.
• Suppliers without a TIN can have WHT deducted at twice the normal rate.
• WHT deducted from you is a credit against your own tax, so keep the evidence.

What to do when a client deducts WHT

• Record the payment as a part payment against the invoice, with the WHT amount noted, so the invoice does not look underpaid for ever.
• Ask the client for the WHT credit note or receipt showing the deduction was paid over.
• Keep those credit notes with your tax records. They reduce the tax you pay later.

If you are the one paying

A company that deducts WHT from a supplier must pay it over to the tax authorities and give the supplier evidence of the deduction. For a finance team paying hundreds of suppliers, that means recording the WHT on each payment so it can be reconciled and remitted, and keeping supplier TINs on file, because a missing TIN changes the rate.

Protect your cash flow

If you are the supplier, make sure your TIN is on every invoice and on file with your regular clients. Without it you risk the doubled rate. When you quote large jobs, remember the cash you receive may be lower than the invoice total and plan for it.

Rates depend on the type of transaction, so check the current rate for your work with your adviser or the sources below rather than relying on an old table.

How Billif helps

Billif invoicing tracks partial payments against each invoice, so a payment short by the WHT amount shows exactly what is outstanding. Your TIN and your clients' details are stored once and appear on every invoice.