AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Often, yes. Under the 2024 Withholding Regulations a business customer deducts tax at source, for example 5% on professional or consultancy fees and 2% on goods or other services from a resident supplier, and pays you the rest. Divide the shortfall by the invoice amount: if it matches a WHT rate, ask for the credit note or remittance evidence; if it does not, it is a short payment to dispute.
An invoice for ₦1,000,000 is paid as ₦950,000. Did the client make a mistake, take a discount you never agreed, or deduct withholding tax? In Nigeria the third is common and lawful, but you only benefit from it if you get proof. This guide shows how to work it out and what to do next.
Why customers deduct tax from your invoice
Withholding tax (WHT) is an advance payment of your income tax. The payer deducts it, pays it to the tax authority in your name, and you later use it as a credit against your own tax. The Deduction of Tax at Source (Withholding) Regulations 2024, effective 1 July 2024, set the rates. PwC Nigeria's summary lists, for resident recipients:
| Type of payment | WHT rate (resident) |
|---|---|
| Professional, consultancy, technical or management fees; commission; brokerage | 5% |
| Supply of goods | 2% |
| Other services | 2% |
| Rent | 10% |
| Royalties | 10% (corporate) / 5% (non-corporate) |
| Directors' fees | 15% / 20% |
Under the same Regulations everyone except individuals is generally expected to deduct, and a small company is exempt from deducting on a transaction below ₦2 million where the supplier has a TIN. WHT is generally creditable unless a law makes it final. Rates are as at the 2024 Regulations; check for later changes under the Nigeria Tax Act 2025.
How to tell WHT from a short payment
- Work out the shortfall: invoice total minus amount received.
- Divide the shortfall by the invoice amount before VAT. WHT is commonly applied to the amount excluding VAT; confirm with the payer.
- If the result is 2%, 5% or 10%, it is very likely WHT. Any other percentage suggests an error, a deduction for a dispute, or a discount.
- Look at the payment narration and any remittance advice for "WHT".
Worked example
Example: you invoice ₦1,000,000 for consultancy plus VAT at 7.5% (₦75,000), a total of ₦1,075,000. You receive ₦1,025,000. The shortfall is ₦50,000, which is 5% of ₦1,000,000: consistent with WHT on consultancy fees. If you had received ₦1,021,250, the shortfall of ₦53,750 would be 5% of the full ₦1,075,000, which suggests WHT was also taken on the VAT; query it. If you received ₦980,000, the ₦95,000 gap is 9.5% of the fee and is not a WHT rate; treat it as a short payment.
What to ask the customer for
- A remittance advice showing gross, WHT and net for each invoice.
- The WHT credit note or receipt issued when the payer remits the tax in your name. Without it you cannot claim the credit.
- Your Tax ID on their record, so the credit is allocated to you. Under the Nigeria Tax Administration Act every taxable person must have one.
- For a short payment: a written reason, or a request for a credit note from you if they say the invoice was wrong.
Our guide to getting your WHT credit notes back covers chasing them. If the gap is not WHT, follow the steps in resolving an invoice dispute.
How to record it
- Bank
- Debit the amount received (₦1,025,000 in the example).
- WHT receivable
- Debit the tax deducted (₦50,000). It is an asset: tax already paid on your behalf.
- Debtor
- Credit the full invoice (₦1,075,000), so the invoice shows as settled.
- Later
- When you file your income tax return, offset the WHT credit notes against tax due.
Do not write the ₦50,000 off as a bad debt or a discount. Keep a WHT schedule listing invoice, payer, amount deducted and whether the credit note has arrived. Uncollected credit notes are tax you have paid and cannot use.
When the customer will not send the credit note
A deduction without a credit note leaves you worse off than if the customer had paid in full: you received less cash and you have nothing to set against your tax. Treat a missing credit note as an open item on the customer's account. Ask in writing for the credit note or proof that the tax was remitted in your name, quoting invoice numbers and amounts. If several months pass, raise it with their finance manager rather than the officer who paid you. Some suppliers note on their statements that WHT deductions are accepted only on receipt of the credit note, which keeps the item visible until it is settled.
If you are not sure which rate applies
Classification is where most disagreements start. A contract that mixes supply of goods with installation or consultancy may be split across rates. Ask the customer which category their tax team used, compare it with the Regulations, and get your accountant's view on anything material. This is information, not tax advice.
Avoiding it next time
- Put your Tax ID on every invoice.
- If you price a job and want a set amount in hand, quote with the WHT in mind.
- Agree with large clients when they will send credit notes, for example with each quarterly statement.
Where Pryme fits
On a Pryme Business Account the Finance agent can match payments to invoices, flag gaps that look like WHT and list missing credit notes for you to chase; a person approves any action.
Questions people ask
Why did my client pay less than my invoice?
Most often because they deducted withholding tax, for example 5% on consultancy fees or 2% on goods. Check whether the gap matches a WHT rate and ask for the credit note.
What is the WHT rate on contracts in Nigeria?
Under the 2024 Withholding Regulations: 2% on supply of goods and other services, 5% on professional, consultancy, technical and management fees, and 10% on rent, for residents.
Is WHT deducted on VAT?
WHT is commonly applied to the amount before VAT. If a payer deducted it from the VAT-inclusive total, query it with them.
What do I do with a WHT credit note?
Keep it and use it against your income tax when you file. Record the deduction as WHT receivable, not as a bad debt.
Sources
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- Premium Times via AllAfrica: Tax ID registration under the Nigeria Tax Administration Act (12 Nov 2025) · accessed Oct 2026
- Techpoint Africa: Guide to the Nigerian tax reform Acts (5 May 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.