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
For a company paying 30% CIT and the 4% development levy, paying a director a salary usually costs less tax overall, because salary is deductible for the company while dividends come out of profit that has already been taxed and then suffer 10% withholding tax. For a small company taxed at 0%, dividends can cost the same or less, depending on whether the dividend WHT is treated as final or the dividend is added to the director's banded income.
Owner-directors of Nigerian companies can take money out in two main ways: a salary (taxed through PAYE) or dividends (paid to shareholders from profit). The 2025 Acts changed both the personal tax bands and the company rates, so older rules of thumb need checking. This guide shows the mechanics and a worked comparison. It is information, not advice.
How each route is taxed
| Salary | Dividend | |
|---|---|---|
| Company deduction | Deductible if wholly and exclusively for the business (NTA s.20(1)) | Not deductible: paid from profit after tax |
| Company tax on that money | None, because it reduces taxable profit | 30% CIT plus 4% levy if not a small company (s.56, s.59) |
| Personal tax | PAYE at the 2025 bands: 0% to 25% | WHT at 10% for residents under the 2024 Regulations (PwC) |
| Who files | Company deducts and remits monthly; employer return by 31 Jan | Company deducts WHT and remits; director keeps the receipt |
The 2025 bands, as DLA Piper (August 2026) and BusinessDay (January 2026) set them out: 0% on the first ₦800,000, 15% on the next ₦2.2m, 18% on the next ₦9m, 21% on the next ₦13m, 23% on the next ₦25m and 25% above ₦50m. See PAYE bands for 2026.
The open question on dividends
Mondaq's January 2026 summary of the Nigeria Tax Act 2025 says an individual's chargeable income includes investment income, naming dividends. If that applies to your dividend, the 10% WHT would be a credit and the dividend would be taxed at your banded rate. If the WHT is treated as the final tax, 10% is the end of it. Confirm the position with your state IRS or adviser before relying on either. The example below shows both.
Worked example: a company that is not small
Example only. Bisi owns 100% of a Lagos distribution company. Profit before paying her anything is ₦30,000,000. She wants ₦12,000,000 out this year. Reliefs such as pension and rent relief are ignored to keep the arithmetic clear, and the CIT and levy bases are assumed to be the same.
| Line | Salary route | Dividend route |
|---|---|---|
| Profit before director pay | ₦30,000,000 | ₦30,000,000 |
| Salary deducted | ₦12,000,000 | ₦0 |
| Taxable profit | ₦18,000,000 | ₦30,000,000 |
| CIT at 30% | ₦5,400,000 | ₦9,000,000 |
| Development levy at 4% | ₦720,000 | ₦1,200,000 |
| Personal tax on ₦12m | ₦1,950,000 (PAYE) | ₦1,200,000 (10% WHT, if final) |
| Total tax | ₦8,070,000 | ₦11,400,000 |
| Bisi receives after tax | ₦10,050,000 | ₦10,800,000 |
| Left in the company | ₦11,880,000 | ₦7,800,000 |
PAYE on ₦12,000,000: ₦0 on the first ₦800,000, ₦330,000 on the next ₦2,200,000 and ₦1,620,000 on the next ₦9,000,000, a total of ₦1,950,000. The dividend route puts slightly more cash in Bisi's hand but costs ₦3,330,000 more tax in total, because the company pays CIT and levy on the ₦12m first. If the dividend is also taxed at her bands with the WHT as a credit, her personal tax rises to ₦1,950,000 and the dividend route's total becomes ₦12,150,000.
Worked example: a small company
Same figures, but the company is a small company (turnover ₦100m or less, fixed assets below ₦250m, not professional services), so CIT is 0% and there is no levy.
- Salary route: company tax ₦0; PAYE ₦1,950,000. Total ₦1,950,000.
- Dividend route, WHT final: company tax ₦0; WHT ₦1,200,000. Total ₦1,200,000.
- Dividend route, banded: company tax ₦0; personal tax ₦1,950,000 with the ₦1,200,000 WHT credited. Total ₦1,950,000.
For a small company, dividends are never worse on these figures and may be better. The answer turns on the open question above.
Other things that matter
- Pension and benefits. Salary can carry pension contributions that are deductible for the director; dividends cannot.
- Evidence of income. Banks and embassies often ask for payslips and PAYE records; a salary gives a clear record.
- Reasonableness. A salary must be a real business cost. An inflated salary paid only to cut company tax invites challenge under the wholly and exclusively test.
- Growth. If you plan to cross the small company thresholds, a structure that works at 0% CIT may cost more next year.
- Mix. Many directors take a salary up to a band they are comfortable with and the rest as dividends.
Steps to decide
- Confirm whether the company is small this year: turnover, fixed assets and type of business.
- Estimate profit before director pay for the year.
- Work out PAYE on a range of salaries using the 2025 bands, and the company tax each salary saves.
- Ask your state IRS or adviser whether dividend WHT is final for you, then price the dividend route both ways.
- Choose a mix, record board approval for salary and dividends, and keep the PAYE and WHT receipts for six years.
Where Pryme fits
A director's salary can be paid through payroll on a Pryme Business Account, with PAYE prepared for approval, and dividends to several shareholders can go out through bulk payouts. The Finance agent can prepare the WHT schedule for a person to approve.
Questions people ask
Is it better to pay myself salary or dividends in Nigeria?
For a company paying 30% CIT and the 4% levy, salary is usually cheaper overall because it is deductible. For a small company at 0% CIT, dividends can cost the same or less.
What is withholding tax on dividends in Nigeria?
10% for resident shareholders under the 2024 Withholding Regulations, as summarised by PwC. Confirm whether it is final in your case.
Are dividends taxed again in my personal tax?
Mondaq's summary of the 2025 Act lists dividends in an individual's chargeable income. Ask your state IRS whether the 10% WHT is a credit or a final tax for you.
Does a director pay PAYE on salary?
Yes. A director on salary is taxed through PAYE at the 2025 bands, deducted by the company and paid to the state IRS.
Sources
- Nigeria Tax Act 2025 (assented 26 Jun 2025), sections 8, 20, 21, 55, 56 and 59 · accessed Oct 2026
- DLA Piper Africa: FAQs on payroll taxes and employer liability in Nigeria (28 Aug 2026) · accessed Oct 2026
- BusinessDay: Nigeria Tax Act 2025 personal income tax explainer (12 Jan 2026) · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- Mondaq (Adeola Oyinlade & Co): Understanding personal income tax under the Nigeria Tax Act 2025 (5 Jan 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.