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Part of the guideDoing business with Africa: paying and getting paid in Nigeria
The short answer
When a Nigerian business pays a foreign company for consulting, technical, management or professional services, it usually deducts 10% withholding tax and pays it to the Nigeria Revenue Service; for other services the rate is 5%, and dividends, interest, royalties and rent are 10%. For a non-resident without a permanent establishment in Nigeria, that deduction is generally the final Nigerian tax, but the rate can double if the recipient has no Nigerian tax ID.
If you invoice a Nigerian client $10,000 and receive $9,000, the missing $1,000 is almost always withholding tax (WHT). It is not a bank charge or a dispute. It is tax deducted at source, and with the right paperwork you can usually credit it against tax at home. This article covers the rates and mechanics as of October 2026. For how WHT fits with FX, invoicing and compliance, see the parent guide on paying and getting paid in Nigeria.
The rates for non-resident companies
Nigeria's Withholding Tax Regulations 2024 took effect on 1 July 2024 and set the current schedule. The Nigeria Tax Act 2025 and Nigeria Tax Administration Act 2025 then took effect on 1 January 2026, and the federal tax authority is now the Nigeria Revenue Service (NRS). The table shows the main rates for payments to non-resident companies, as published by PwC in May 2026.
| Type of payment | Rate for a non-resident company |
|---|---|
| Consultancy, technical, management and professional fees; commission | 10% |
| Dividends and interest | 10% |
| Royalties | 10% |
| Rent, hire or lease | 10% |
| Other construction and related activities; brokerage | 10% |
| Construction of roads, bridges, buildings and power plants | 5% |
| Other services not specifically listed | 5% |
| Entertainers and sportspersons | 15% |
Classification matters. A software subscription, a consulting retainer and a licence of your brand can fall into different lines. Agree with your client in writing how each invoice line will be treated.
When it is a final tax
For a non-resident company with no permanent establishment (PE) or significant economic presence (SEP) in Nigeria, WHT on technical, professional, management and consultancy fees is the full Nigerian tax on that income. KPMG notes that under the 2025 law, payments that originate from Nigeria can create a WHT liability even where the foreign company has no PE or SEP, and that WHT works as a final minimum tax for non-residents.
If you do have a PE in Nigeria, for example staff working on site for an extended period or a fixed office, the picture changes: you may need to file a Nigerian return and the WHT becomes a credit against the tax on that return. Digital service providers should also check whether they meet the SEP rules, which the Act leaves to a regulation from the Minister of Finance.
Why a Nigerian tax ID matters
Two rules make registration more than a formality.
- The rate can double. Under the 2024 Regulations, a payer must deduct twice the normal rate if the recipient has no valid tax identification number (TIN). PwC reports this is capped at 20% and does not apply to passive income such as dividends.
- Your client can be penalised. EY points out that under section 100(2) of the Nigeria Tax Administration Act, a Nigerian company that awards a contract to an unregistered person faces a ₦5 million penalty. Expect Nigerian clients to ask for your TIN or for a written position on why you do not need one.
- Registration is broad. The 2025 Act defines a taxable person by economic activity, not by physical presence. EY's reading is that many non-resident companies without a PE may still need to register, even if WHT is their only Nigerian tax.
A worked example: a $50,000 consulting contract
A Toronto consultancy agrees a $50,000 strategy project with a Lagos manufacturer. The figures use the published rates; bank charges are left out.
| Scenario | WHT deducted | Paid to you |
|---|---|---|
| Fee quoted gross, consultancy registered for a Nigerian TIN | $5,000 (10%) | $45,000 |
| Fee quoted gross, no Nigerian TIN | $10,000 (20%) | $40,000 |
| Fee quoted net of WHT, TIN held: client grosses up to $55,555.56 | $5,555.56 (10%) | $50,000 |
In the first case the consultancy holds a $5,000 tax credit in Nigeria and can usually claim relief against Canadian tax on the same profit. In the second, it loses an extra $5,000 that may be hard to recover. In the third, the client bears the tax; that has to be agreed before signing, not after.
Getting the credit and claiming relief at home
- Ask for the receipt. The 2024 Regulations require the payer to issue a receipt and statement for tax deducted. That document is your evidence.
- Note the protection. The receipt entitles you to a credit even if the payer fails to remit the tax; the unremitted amount becomes the payer's liability, with penalties and interest.
- Match it to the invoice. Keep the receipt, your invoice and the payment confirmation together so the gross, the deduction and the net agree.
- Claim relief at home. UK, Canadian and several EU companies can rely on a double tax treaty with Nigeria; US companies use domestic foreign tax credit rules, as there is no US treaty. See our article on the UK–Nigeria double tax treaty for the UK route.
- Check VAT separately. WHT is income tax. VAT on services consumed in Nigeria is a different obligation, covered in VAT on digital services sold into Nigeria.
When the deduction happens
Under the 2024 Regulations the duty to deduct arises at the earlier of payment or settlement; for connected parties it is the earlier of payment or accrual. A payer that deducts late or fails to remit owes an additional 10% a year plus interest at the CBN's prevailing rate. Over-the-counter purchases with no prior contract are among the listed exemptions, but a services contract with a foreign supplier will rarely qualify.
Withholding tax also explains many short payments that look like errors. Before chasing a client, check the remittance advice against the rates above; the Nigeria business guide covers what else a client's bank needs before it releases funds.
Where Pryme fits
For tax advice and NRS registration, use a Nigerian tax adviser; the sections above set out the questions to ask. What any foreign supplier can do is keep the evidence in order: record the gross fee, the deduction and the net receipt against each invoice, and file the client's withholding-tax receipt with it, so a short payment reads as WHT rather than an unexplained gap. Invoicing is available on a Pryme business account.
A business multicurrency account holds USD, GBP, EUR and NGN in separate balances. Pryme Financial Ltd is a technology company, not a bank. In Nigeria, naira deposits are held by Solid Allianze Microfinance Bank Ltd, licensed by the CBN and insured by the NDIC up to the applicable limit; outside Nigeria, activities are carried out through regulated partners. A business account can be opened from any country; the documents required for your business are shown when you apply.
Questions people ask
What is the withholding tax rate on consulting fees paid to a foreign company in Nigeria?
As of 2026 it is 10% for consultancy, technical, management and professional fees paid to a non-resident company. It can double, up to a 20% cap, if the company has no Nigerian tax identification number.
Is Nigerian withholding tax a final tax for foreign companies?
For a non-resident company without a permanent establishment or significant economic presence in Nigeria, WHT on technical, professional, management and consultancy fees is generally its final Nigerian tax. A company with a Nigerian PE may have to file a return and use WHT as a credit.
Do foreign companies need a Nigerian TIN?
Increasingly, yes. The 2025 tax Acts define taxable persons by economic activity rather than presence, and Nigerian payers face a ₦5 million penalty for contracting with unregistered persons. Without a TIN, the WHT rate on many payments doubles.
How do I recover Nigerian withholding tax?
You usually cannot get it refunded in Nigeria if it is a final tax. Instead, keep the WHT receipt and claim a foreign tax credit at home, under a treaty where one exists or under domestic rules such as those in the US.
Why did my Nigerian client pay less than my invoice?
Most often because it deducted withholding tax, which is required by Nigerian law. Ask for the WHT receipt, check the rate against the published schedule, and agree for future invoices whether your fees are gross or net.
Sources
- PwC Tax Summaries: Nigeria corporate withholding taxes (reviewed May 2026) · accessed Oct 2026
- KPMG: Nigeria Tax Act 2025 reforms (June 2026) · accessed Oct 2026
- EY: Tax registration for non-resident companies in Nigeria (Feb 2026) · accessed Oct 2026
- Zawya: Reviewing the WHT Regulations 2024 as the Nigeria Tax Act takes effect · accessed Oct 2026
- Mondaq: Taxation of digital activities and cross-border transactions under the Tax Reform Acts 2025 · 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.