Withholding Tax (WHT)

Manage Withholding Tax deductions and certificates in compliance with Nigerian tax regulations. Access WHT management at https://accounting.digit-tally.io/witholding-tax.

[SCREENSHOT: WHT management interface at accounting.digit-tally.io/witholding-tax]

What is Withholding Tax?

Withholding Tax (WHT) is an advance payment of income tax deducted at source from certain transactions. The payer withholds a percentage of the payment and remits it to tax authorities on behalf of the payee.

Key Benefits

• Automated WHT Tracking - Track WHT deductions and credits
• Certificate Management - Generate and store WHT certificates
• Compliance - Stay compliant with FIRS WHT regulations
• Credit Tracking - Monitor WHT for offset against annual tax

Understanding Nigerian WHT

Who Deducts WHT?

As a Company or Government Agency: You must deduct WHT when making payments for:

• Professional fees
• Management and technical services
• Rent
• Dividends
• Interest
• Royalties
• Contracts and commissions

As an Individual: You generally don't deduct WHT unless you're in the course of business.

Who Suffers WHT?

As a Supplier or Service Provider: WHT is deducted from payments you receive for goods or services. You receive a WHT certificate and can use it to offset your company income tax.

Nigerian WHT Rates

Common WHT Rates

Transaction Type	Corporate Rate	Individual Rate
Dividend	10%	10%
Interest	10%	10%
Rent	10%	10%
Royalties	10%	5%
Professional/Technical Fees	10%	5%
Management Fees	10%	5%
Commissions	10%	5%
Contracts	5%	5%
Director's Fees	10%	10%
Consultancy	10%	5%

Special WHT Scenarios

Construction/Building Contracts:

• 2.5% on construction contracts awarded to local contractors
• 5% on other contracts

Import of Goods:

• Advance Income Tax: 2-5% depending on imported goods category

Non-Residents:

• Generally 10% on most payments
• Subject to double taxation treaties

Important

Always verify current WHT rates with FIRS or your tax advisor, as rates may change based on regulations and recipient category.

How WHT Works in Digit Tally

Recording WHT on Purchases (You as Payer)

When recording supplier invoices where you must deduct WHT:

Step 1: Record the full invoice amount in Suppliers app

Step 2: Note the WHT percentage and amount

Step 3: Pay supplier net of WHT (Invoice Amount - WHT)

Example:

• Professional service invoice: NGN 1,000,000
• WHT @ 10%: NGN 100,000
• Net payment to supplier: NGN 900,000
• WHT remitted to FIRS: NGN 100,000

[SCREENSHOT: Recording purchase invoice with WHT deduction]

Recording WHT on Sales (You as Recipient)

When customers deduct WHT from your payment:

Step 1: Issue full invoice amount

Step 2: Receive payment net of WHT

Step 3: Obtain WHT certificate from customer

Step 4: Track WHT credit for tax filing

Example:

• Sales invoice: NGN 2,000,000
• WHT @ 5%: NGN 100,000
• Net receipt from customer: NGN 1,900,000
• WHT certificate: NGN 100,000 (to offset company income tax)

[SCREENSHOT: Recording sales with WHT deduction]

Managing WHT Deductions

View WHT Summary

Access WHT management to see:

Section	What It Shows
WHT Deducted	WHT you deducted from suppliers (payable to FIRS)
WHT Suffered	WHT deducted by customers (credit for you)
Net WHT Position	Amount payable or credit available
Current Period	Month/quarter summary
Year-to-Date	Cumulative WHT for the year

[SCREENSHOT: WHT summary dashboard]

Filter WHT Transactions

Filter WHT by:

• Date Range - Specific period
• Transaction Type - Rent, professional fees, dividends, etc.
• Vendor/Customer - Specific party
• WHT Status - Paid, unpaid, credited

[SCREENSHOT: WHT filtering options]

WHT Certificates

Generating WHT Certificates

When you deduct WHT as a payer:

Step 1: Go to WHT Management Step 2: Select the transaction Step 3: Click Generate WHT Certificate Step 4: Review certificate details:

• Recipient name and TIN
• Payment date and amount
• WHT rate and amount
• Your company details and TIN Step 5: Download or print certificate Step 6: Issue to supplier/service provider

[SCREENSHOT: WHT certificate generation interface]

WHT Certificate Format

A valid WHT certificate must include:

• Payer Information (your company)

  • Name
  • TIN (Tax Identification Number)
  • Address

• Payee Information (supplier/service provider)

  • Name
  • TIN
  • Address

• Payment Details

  • Date of payment
  • Description of service/goods
  • Gross amount
  • WHT rate
  • WHT amount
  • Net amount paid

• Declaration and Signature

  • Authorized signatory
  • Date issued

[SCREENSHOT: Sample WHT certificate showing all required fields]

Storing WHT Certificates Received

When you receive WHT certificates from customers:

Step 1: Go to WHT Management Step 2: Select WHT Suffered Step 3: Click Upload Certificate Step 4: Attach PDF/image of certificate Step 5: Enter certificate details:

• Certificate number
• Issuer (customer)
• Date issued
• Amount Step 6: Save for records

[SCREENSHOT: Upload WHT certificate interface]

Record Keeping

Keep all WHT certificates (issued and received) for at least 6 years for audit and tax purposes.

Filing and Remitting WHT

Monthly WHT Returns

As a payer, you must file WHT returns and remit deducted tax to FIRS.

Deadline: Within 30 days of deduction (or 21st of following month)

Steps:

1. Go to WHT Management
2. Select WHT Deducted for the month
3. Generate WHT return schedule
4. File with FIRS using prescribed form
5. Pay WHT to FIRS

[SCREENSHOT: Monthly WHT return preparation]

WHT Return Components

Your WHT return should list:

• Date of payment
• Name of payee
• TIN of payee
• Nature of payment
• Gross amount
• WHT rate
• WHT amount deducted
• Net amount paid

Exporting WHT Data

Export WHT schedules in FIRS-accepted formats:

• Excel - For completing FIRS templates
• PDF - For records
• CSV - For data import

[SCREENSHOT: WHT export options]

WHT Credit Utilization

Using WHT Credits Against Company Income Tax

WHT suffered can be offset against your annual Company Income Tax:

Step 1: Calculate total company income tax for the year

Step 2: Sum all WHT certificates received

Step 3: Offset WHT against tax liability

Example:

• Annual Company Income Tax: NGN 5,000,000
• Total WHT Suffered: NGN 800,000
• Net Tax Payable: NGN 4,200,000

[SCREENSHOT: WHT credit utilization in tax computation]

WHT Refunds

If WHT suffered exceeds your tax liability:

• Carry forward excess to next year, OR
• Apply for refund from FIRS (subject to verification)

Refund Requirements:

• Submit all WHT certificates
• File audited accounts
• Complete FIRS refund application form
• Processing time: 90 days (in practice, may be longer)

Common WHT Scenarios

Scenario 1: Professional Services Payment

Transaction: You pay a consultant NGN 5,000,000 for advisory services.

WHT Calculation:

• Gross fee: NGN 5,000,000
• WHT @ 10%: NGN 500,000
• Net payment: NGN 4,500,000

Actions:

1. Record invoice: NGN 5,000,000
2. Pay consultant: NGN 4,500,000
3. Remit to FIRS: NGN 500,000
4. Issue WHT certificate: NGN 500,000

[SCREENSHOT: Professional services WHT scenario]

Scenario 2: Rent Payment

Transaction: You pay annual office rent of NGN 12,000,000.

WHT Calculation:

• Annual rent: NGN 12,000,000
• WHT @ 10%: NGN 1,200,000
• Net payment: NGN 10,800,000

Actions:

1. Pay landlord: NGN 10,800,000
2. Remit to FIRS: NGN 1,200,000
3. Issue WHT certificate: NGN 1,200,000

Scenario 3: Dividend Payment

Transaction: You distribute dividends of NGN 20,000,000 to shareholders.

WHT Calculation:

• Gross dividends: NGN 20,000,000
• WHT @ 10%: NGN 2,000,000
• Net dividends: NGN 18,000,000

Actions:

1. Pay shareholders: NGN 18,000,000
2. Remit to FIRS: NGN 2,000,000
3. Issue WHT certificates to each shareholder

Scenario 4: Contract Payment

Transaction: You pay NGN 50,000,000 for construction contract.

WHT Calculation:

• Contract value: NGN 50,000,000
• WHT @ 2.5%: NGN 1,250,000
• Net payment: NGN 48,750,000

Actions:

1. Pay contractor: NGN 48,750,000
2. Remit to FIRS: NGN 1,250,000
3. Issue WHT certificate: NGN 1,250,000

WHT Compliance Requirements

Monthly Obligations

Obligation	Deadline	Applies To
Deduct WHT	At time of payment	All qualifying payments
Remit WHT to FIRS	Within 30 days of deduction	All payers
File WHT Returns	Within 30 days of deduction	All payers
Issue WHT Certificates	Within 30 days of remittance	All payers

Annual Obligations

• WHT Schedule - Submit with annual tax returns
• Reconciliation - Match WHT remitted to returns filed
• Certificate Archive - Maintain for audit

Penalties

Late Remittance:

• 10% per annum interest on unpaid WHT
• Plus 5% penalty

Failure to Deduct WHT:

• Payer remains liable for the WHT
• Plus penalties and interest

Non-Issuance of Certificates:

• NGN 25,000 per certificate not issued

Avoid Penalties

Always remit WHT within 30 days of deduction and issue certificates promptly.

WHT Reports

Available Reports

Report	Purpose
WHT Deducted Report	List of all WHT you deducted (payable)
WHT Suffered Report	List of all WHT deducted by customers (credit)
WHT by Transaction Type	Breakdown by rent, fees, dividends, etc.
WHT by Vendor/Customer	Party-wise WHT summary
Monthly WHT Schedule	For FIRS filing
Annual WHT Summary	Year-end reconciliation

[SCREENSHOT: WHT reports menu]

Generating WHT Reports

1. Go to WHT Management
2. Select Reports
3. Choose report type
4. Select date range
5. Filter by transaction type (optional)
6. Click Generate
7. Export or print

[SCREENSHOT: Generated WHT report with data]

Troubleshooting WHT Issues

Issue: WHT Not Calculating Correctly

Check:

• Is the correct WHT rate selected?
• Is recipient category (individual/corporate) correct?
• Are there special rate agreements or exemptions?

Issue: Cannot Find WHT Certificate

Solution:

• Check WHT Suffered section
• Filter by date range and customer
• Verify certificate was uploaded/generated
• Contact customer for reissuance if lost

Issue: WHT Credit Not Showing in Tax Computation

Solution:

• Ensure all WHT certificates are uploaded
• Check certificate details (TIN, amounts) are correct
• Verify WHT was suffered in the tax year
• Regenerate tax computation report

Frequently Asked Questions

Do I deduct WHT on all supplier payments?

No. WHT applies only to specific transaction types (rent, professional fees, dividends, etc.). Regular purchases of goods may not attract WHT unless specifically required.

What if supplier refuses to accept payment net of WHT?

WHT is a legal obligation. Educate the supplier that you must deduct and remit WHT, and will provide a certificate they can use for tax credit.

Can I offset WHT deducted by customers against VAT?

No. WHT offsets only Company Income Tax, not VAT or other taxes.

What if I don't have the supplier's TIN?

You should insist on obtaining the TIN before making payment. In practice, you may still deduct WHT and remit, but proper documentation requires the TIN.

How long does FIRS take to process WHT refunds?

Officially 90 days, but in practice it can take 6-12 months. Many companies prefer to carry forward excess WHT to future years.

Related Topics

• Company Income Tax - How WHT offsets CIT
• VAT Management - Other tax obligations
• Purchase Invoices - Recording WHT on purchases
• Create Invoices - Handling WHT on sales

Need Help?

Support

For WHT-related questions:

• Email: support@digit-tally.io
• Consult with your tax advisor for specific situations
• Refer to FIRS WHT guidelines for latest rates and regulations
• FIRS Contact Centre: taxinfo@firs.gov.ng

What's Next?

• Company Income Tax - Learn about corporate tax
• PAYE Management - Manage employee income tax
• Financial Reports - View all accounting reports