Withholding tax by transaction type and recipient.
Withholding tax
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Rate applied
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Net paid to vendor
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One mechanism, a dozen different rates
Withholding tax is not a single rate you memorise. It is a method, applied as money changes hands, where the payer holds back a percentage and remits it for the recipient. What varies is the percentage, which shifts with the kind of payment and who receives it. This calculator is the general-purpose version that covers the full spread of transaction types in one place, from dividends and interest through royalties, professional fees, supplies, construction, brokerage, directors' fees, and gaming winnings. If a more specific tool exists for rent or contracts, those drill deeper, but this is where you start when you are not sure which rate even applies.
The headline rates this calculator applies cluster around a few values. Dividends and interest sit at 10 percent. Royalties and most professional or consultancy fees run at 5 percent for residents and 10 percent for non-residents. Supplies and major construction are 2 percent, other construction and brokerage 5 percent, and directors' fees climb to 15 percent for residents and 20 percent for non-residents. These follow the established withholding schedule, but the 2025 tax reform is revising several lines, so confirm any rate that drives a real payment with the FIRS, the Federal Inland Revenue Service, or your state internal revenue service.
Residency changes the rate, not just the destination
For several categories the recipient's residency moves the number itself. A resident consultant has 5 percent withheld on a fee, while the same fee paid to a non-resident consultant is withheld at 10 percent. Directors' fees jump from 15 percent for a resident to 20 percent for a non-resident. The tool asks for residency precisely because picking the wrong side understates or overstates the deduction, and for non-residents a double-tax treaty can sometimes lower the rate below what is shown here.
When the 20 percent cap actually does the work
The no-TIN penalty doubles the rate but never lets it exceed 20 percent, and that ceiling only bites on the higher categories. Take NGN 1,000,000 of interest paid to a recipient with no Tax Identification Number. The base rate this calculator applies is 10 percent, doubling would give 20 percent, and the cap holds it at exactly 20 percent rather than letting it run higher. The deduction is NGN 200,000 and the net is NGN 800,000. Compare that with a resident consultancy fee of the same NGN 1,000,000 with a valid TIN, where 5 percent leaves NGN 50,000 withheld and NGN 950,000 net.
| Step | Interest, no TIN | Consultancy, valid TIN |
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The chart shows the withheld tax against the net paid for the current inputs.
A practical judgement: the cap means the no-TIN penalty hurts most on low-rate, high-value transactions, where a 2 percent goods rate quietly doubles to 4 percent on a large invoice, rather than on the 10 percent categories that were already near the ceiling. If you deal with unregistered vendors, the cheapest fix is almost always to get them a TIN before the next payment.
Who reaches for this tool
It is built for accounts payable staff facing an invoice that does not obviously fit a category, finance leads training a team, and recipients checking a deduction on their remittance advice. The frequent mistake is applying a familiar rate out of habit, the classic being treating every professional invoice as 10 percent when a resident supplier should sit at 5 percent. Run the actual category and residency through the tool rather than defaulting to last week's rate.
General WHT questions
Can a tax treaty reduce the non-resident rate shown here?
Yes. Where Nigeria has a double-tax treaty with the recipient's country, the treaty rate on dividends, interest, or royalties can be lower than the domestic non-resident rate this calculator applies, and the treaty rate prevails when properly claimed. The tool shows the domestic figure, so a non-resident with treaty cover should check whether a reduced rate is available.
Is WHT charged on the amount before or after VAT?
Withholding tax is generally computed on the value of the supply rather than on the VAT element, so a payer typically strips out VAT before applying the WHT rate. Mixing the two inflates the deduction. If your invoice bundles VAT into one figure, separate it before entering the amount here, and confirm the treatment with the FIRS where the invoice format is unusual.
Which rate wins if a payment spans two categories?
A payment that genuinely covers both a supply of goods and a separate service should be split so each part meets its own rate, not forced into one line. Where one element dominates and the rest is incidental, the dominant character usually governs. When the mix is material, apportion the invoice and withhold on each piece.