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The short answer
If a Nigerian client cancels a project, what you can keep depends almost entirely on what the contract said before work began. Take a deposit that is non-refundable once work starts, set a kill fee schedule tied to project stages, and say that rights in the work pass only on payment. Write the amounts in the invoice currency and agree how Nigerian withholding tax applies to any cancellation payment.
Why cancellations hurt more across borders
A cancelled project with a client in Canada is a nuisance; with a client in Lagos it can be a write-off. Chasing payment through a Nigerian court from Canada is slow and costly, and a client who stops replying is hard to reach. The practical protection is to be paid ahead of the work, in stages, so that cancellation at any point leaves you paid for what you have done. Our guide to unpaid invoices from Nigerian clients covers what to do once money is already overdue.
Deposits
A deposit is money paid before you start. Two features make it useful:
- It is applied to the final invoice. The client is not paying extra; the deposit is part of the fee, credited at the end.
- It becomes non-refundable once work starts. Say this in the contract, and define "work starts" (for example, the kick-off call or receipt of the brief).
There is no standard size; a sensible deposit is the cost of the time you reserve and the first stage of work. For a new client, or one paying in naira from a business account that may need time to source dollars, lean towards the higher end.
If the client will pay the deposit in naira, fix the naira amount on the deposit invoice and say which rate converts it to the contract currency, so neither side argues later about what was paid. If the deposit is in dollars, allow for the client's bank needing a day or two to process an outward transfer, and start work only when the money has arrived, not when a transfer slip is sent on WhatsApp.
Kill fees
A kill fee is the amount due if the client ends the project for its own reasons before completion. It works best as a schedule tied to stages the client can see, rather than a single percentage:
| Stage reached when the client cancels | Example amount due | What the client receives |
|---|---|---|
| Before first delivery | Deposit kept | Nothing beyond notes from the kick-off |
| After first concepts or draft | 60% of total fee | Delivered drafts, licensed for internal use |
| After second round or near-final | 85% of total fee | All drafts delivered to date |
| After final delivery | 100% of fee | Final files and the agreed rights |
The percentages above are examples, not a standard. Choose figures that match how much of the work is front-loaded in your field.
Worked example
Example only, with invented figures. Ife, a designer in Winnipeg, quotes a Lagos restaurant group US$4,000 for a brand identity in three stages, with the schedule above and a 40% deposit.
- Deposit before work starts: 40% × US$4,000 = US$1,600.
- The client cancels after receiving first concepts. The kill fee is 60% × US$4,000 = US$2,400, so Ife invoices US$2,400 − US$1,600 = US$800.
- Had the client cancelled after the second round, the amount due would be 85% × US$4,000 = US$3,400, so the invoice would be US$3,400 − US$1,600 = US$1,800.
- Because the group is a company, it may deduct Nigerian withholding tax from the US$800 as from any fee. The contract says the kill fee, like the main fee, is quoted gross.
Clauses to include
- Termination for convenience. Either side may end the project by written notice; the kill fee schedule applies if the client does.
- Termination for breach. If the client fails to pay or supply inputs within, say, 14 days of a reminder, you may stop work and treat it as cancellation by the client.
- Pause, not cancel. If the client "pauses" for longer than an agreed period, the project is treated as cancelled.
- Rights on payment. Copyright or a licence passes only when the relevant amount is paid. Unpaid drafts may not be used. For more on IP clauses see IP and NDAs with Nigerian clients.
- Currency and charges. Amounts in one currency, with transfer charges paid by the client.
- Governing law. Name the law and forum, discussed in governing law for contracts with Nigerian clients.
Tax and records
Nigerian companies and institutions that pay non-resident service providers may deduct withholding tax; PwC lists 10% for professional, consultancy and management fees paid to non-residents (May 2026). Expect it on deposits and kill fees as well, unless your contract and the client agree otherwise, and ask for the deduction receipt. On the Canadian side, deposits and kill fees are business income like any other fee, and services to a non-resident remain generally zero-rated for GST/HST under CRA Memorandum 4-5-3, which also asks suppliers to keep contracts, purchase orders and invoices as evidence. CRA expects business records to be kept for six years from the end of the tax year they relate to, which includes the signed contract and the cancellation correspondence.
Where Pryme fits
Deposits only protect you if they arrive quickly. With a Pryme Business Account opened from Canada, a Nigerian client can pay a naira deposit to naira account details or a dollar deposit to USD details in your name, and Invoicing lets you issue the deposit, stage and kill fee invoices from one place. Balances stay in the currency received until you choose to convert. See business multicurrency.
Questions people ask
What is a fair kill fee for a cancelled project?
There is no fixed standard. Tie it to stages: deposit kept before first delivery, then a rising share of the fee as drafts are delivered.
Can I keep the deposit if a Nigerian client cancels?
Only if the contract says it is non-refundable once work starts. Write that in before you begin and define when work starts.
Will a Nigerian company deduct withholding tax from a kill fee?
It may, as with any fee for services. Agree in the contract that amounts are gross and ask for the withholding receipt.
Who owns the drafts if the client cancels without paying?
Whatever the contract says. A clause that rights pass only on payment means unpaid drafts may not be used.
Sources
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- CRA GST/HST Memorandum 4-5-3: Exports of services and intangible personal property (Dec 2023) · accessed Oct 2026
- CRA: Where to keep your records, how long to keep them (modified 3 Aug 2026) · accessed Oct 2026
- Mondaq (Danol Partners): Overview of the Deduction of Tax at Source (Withholding) Regulations 2024 (16 Oct 2024) · 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.