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The short answer
When a Nigerian subsidiary pays a management fee to its UK parent, it must withhold 10% Nigerian withholding tax, which PwC says is a final tax for a non-resident company providing management or technical services; the UK treaty does not reduce it. The subsidiary can deduct the fee only if it is wholly and exclusively for producing its income and priced at arm's length, and the UK parent includes the fee in its taxable profits.
UK parents often support a Nigerian subsidiary with finance, HR, IT, legal and leadership time, and want to recover that cost through a management fee. Done well, it is a normal intercompany charge. Done badly, it is a payment Nigeria taxes, disallows and holds up at the bank. The steps below follow the money from the agreement to the UK bank account.
Step 1: the agreement and the price
Put a written service agreement in place before services start. It should list the services, how the fee is calculated, invoicing and payment terms, and the currency. Price it at arm's length; for routine support services a cost-plus approach is common. PwC's summary of Nigeria's transfer pricing rules says they cover services between connected persons and allow the tax authority to adjust non-arm's length prices; see transfer pricing between a UK company and its Nigerian arm.
Step 2: Nigerian withholding tax
| Item | Rule (PwC, reviewed May 2026) |
|---|---|
| WHT on management, technical, consultancy and professional fees to a non-resident company | 10% |
| UK treaty rate | 10% (no reduction) |
| Status for a non-resident company providing these services | Final tax |
| Filing | By the 21st of the month after payment |
| Related-party timing | Deduct at the earlier of payment or when the liability is recognised |
The subsidiary deducts the 10%, pays it to the Nigeria Revenue Service and gives the parent a receipt. Keep that receipt; it is the evidence for any UK relief.
Worked example (illustrative)
Example: the agreed fee is ₦50,000,000 for the year. The subsidiary withholds 10% = ₦5,000,000 and pays the parent ₦45,000,000. If the subsidiary books the liability on 31 December but pays in March, under the related-party rule the WHT falls due on the earlier date.
Step 3: is the fee deductible in Nigeria?
Section 20(1) of the Nigeria Tax Act 2025 allows expenses wholly and exclusively incurred in producing the income. A fee for services the subsidiary actually received and used qualifies; a percentage of turnover with no evidence of services is exposed. Keep time records, deliverables, emails and reports that show the work was done for the subsidiary. A disallowed fee raises the subsidiary's taxable profit, so the cost of poor evidence is real.
Step 4: the treaty and UK tax
The UK-Nigeria treaty has no separate article for management or technical fees. Under Article 7, a UK company's business profits are taxable only in the UK unless it has a permanent establishment in Nigeria. Nigeria nonetheless applies 10% WHT, and PwC lists the UK treaty rate as 10%. Article 22 gives UK credit for Nigerian tax payable 'in accordance with this Agreement'; whether that covers this WHT for your facts is a question for your UK adviser. See double tax relief for Nigerian WHT.
For UK VAT, ACCA's guidance explains that most business-to-business services to a customer outside the UK are outside the scope of UK VAT under the general rule, if you hold evidence the customer is in business. Corporation tax on the fee is covered in corporation tax on management fees.
Step 5: getting the money out
The subsidiary pays the net fee in foreign currency through its bank. Under the CBN's FX Manual effective 1 June 2026, banks process outward remittances against documents. Ask the subsidiary's bank in advance exactly what it needs for a service fee: typically the agreement, the invoice, evidence of WHT paid and board approval. Also ask whether the agreement must be registered with the National Office for Technology Acquisition and Promotion before the bank will remit; we could not confirm the current rule from an official page.
Other ways to move value to the UK
A management fee is one of several routes, and each has its own Nigerian WHT. PwC's May 2026 table gives 10% for non-resident companies on dividends, interest, royalties and management fees alike. The differences lie elsewhere: a fee or interest can be deductible for the subsidiary if it passes the tests, while a dividend is paid from after-tax profit; a dividend is usually exempt for a UK company, while fee and interest income is taxable in the UK. See paying dividends to a UK parent and compare the routes with your advisers before choosing.
Checklist
- Signed agreement before services start.
- Arm's length price with a written basis.
- Evidence that services were delivered.
- 10% WHT deducted, paid and receipted.
- Bank's document list confirmed before invoicing.
- UK adviser's view on credit for the WHT.
Where Pryme fits
A Pryme Business Account on the UK side can receive the fee in pounds, dollars or naira and keep it in the currency it arrived in until you choose to convert with Swap. Invoicing raises the intercompany invoice with its reference, and the Finance agent can match the payment and WHT receipt for a person to approve.
Questions people ask
What WHT applies to management fees paid from Nigeria to the UK?
PwC gives 10% for non-resident companies, with no reduction under the UK treaty. It is a final tax for a non-resident company providing these services.
Can a Nigerian subsidiary deduct a management fee?
Only if it is wholly and exclusively incurred in producing the subsidiary's income and priced at arm's length. Keep evidence that services were provided.
Is a management fee to a Nigerian subsidiary subject to UK VAT?
Most business-to-business services to customers outside the UK are outside the scope of UK VAT under the general rule. Keep evidence of business status.
Can the UK parent get credit for the Nigerian WHT?
The treaty gives credit for Nigerian tax payable in accordance with it. Whether that covers WHT on management fees depends on the facts; ask a UK adviser.
Sources
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, group taxation and transfer pricing (reviewed 29 May 2026) · accessed Oct 2026
- Nigeria Tax Act 2025 (text via Africa Check) · accessed Oct 2026
- GOV.UK: 1987 UK-Nigeria double taxation agreement (in force) · accessed Oct 2026
- ACCA In Practice: VAT on supplies of services to customers outside the UK (Sep 2022) · accessed Oct 2026
- Mondaq (Pavestones Legal): CBN Foreign Exchange Manual 2026 (24 Jun 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.