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
A Nigerian payer deducts withholding tax at 10% on technical, professional, management and consultancy fees paid to a non-resident company, and 5% on other services, under the 2024 Regulations as shown by PwC in May 2026. The Italy–Nigeria treaty covers only air and shipping, so it does not reduce these rates.
Why your Nigerian client pays you less than the invoice
An Italian company that invoices a Nigerian customer often finds that the payment arrives short. The difference is usually Nigerian withholding tax (WHT): the Nigerian payer deducts a percentage at source and pays it to the tax authority. For a foreign company with no presence in Nigeria, that deduction can be the whole of its Nigerian tax on the income, which is why it matters to price and document it properly.
The rates come from the Deduction of Tax at Source (Withholding) Regulations 2024, effective 1 July 2024. PwC's Nigeria tax summary (reviewed 29 May 2026) still shows them. Whether any of these rates has changed under the Nigeria Tax Act 2025 has not been confirmed in an official source we have seen, so check before relying on them for a large contract.
The rates that apply to a non-resident company
| Type of payment to a non-resident company | WHT rate (PwC, May 2026) |
|---|---|
| Technical, professional, management and consultancy fees, commission | 10% |
| Other services | 5% |
| Dividends | 10% |
| Interest | 10% |
| Royalties | 10% |
| Rent, hire or lease | 10% |
For comparison, a resident Nigerian company receiving professional fees suffers 5%, so a foreign company pays the higher rate. PwC states that WHT deducted from a non-resident company's technical, professional, management and consultancy fees is a final tax: the Nigerian side considers its tax on that income settled by the deduction. PwC's highlights of the 2024 Regulations add that a vendor without a Nigerian Tax ID can face twice the rate on trading income; in practice PwC notes this mostly bites on non-residents.
No treaty reduction for Italy
Many readers expect the Italy–Nigeria treaty to cut these rates. The FIRS's Information Circular 2022/15 lists the treaties in force and records that the one with Italy covers air and shipping only. A consulting or software firm cannot use it to reduce WHT on fees, dividends, interest or royalties, so the domestic rates above apply.
What the Nigerian payer must do, and what you should ask for
- Deduct at the right rate when it pays or settles your invoice.
- Remit the tax to the federal tax authority (now the Nigeria Revenue Service, formerly FIRS) by the 21st of the following month, per PwC.
- Issue you a receipt showing your name, the nature of the payment, the gross amount, the tax deducted and the month. Under the 2024 Regulations it is the customer, not the tax authority, that issues it, and PwC recommends payment reference numbers on it.
Ask for the receipt every time. It is your only evidence of Nigerian tax suffered, and your commercialista will need it when deciding how the deduction is treated in your Italian accounts and return. Whether and how Italy gives credit for a foreign tax withheld without a treaty is an Italian tax question to raise with your adviser; this article does not answer it.
Pricing a contract with WHT in mind
Example only. A Milan engineering consultancy agrees a €10,000 fee for a feasibility study with a Lagos company.
- If the contract simply says €10,000: the Lagos company deducts 10%, €1,000, and pays €9,000. The consultancy receives €9,000 plus a WHT receipt for €1,000.
- If the consultancy wants €10,000 net, the contract must be grossed up: €10,000 ÷ 0.90 = €11,111.11. The 10% WHT is €1,111.11 and €10,000 arrives.
- Many contracts instead state that fees are "net of any withholding"; that clause shifts the cost to the Nigerian payer, who must then gross up itself.
Agree this before work starts. A dispute over 10% after delivery is a common reason Italian firms lose margin on Nigerian projects.
When WHT is not the end of the story
WHT is final only where the Italian company has no taxable presence in Nigeria. KPMG's analysis of the Nigeria Tax Act (August 2025) notes that a company with a permanent establishment or a significant economic presence is taxed on its Nigerian profits, with tax at least equal to the WHT deducted, or 4% of Nigerian income where no WHT applies. If your staff work in Nigeria for long periods or you sell heavily into Nigeria, read does an Italian company have a taxable presence in Nigeria?.
Where Pryme fits
An Italian company receiving from Nigeria can hold naira and euro in a Pryme Business Account with local account details for each, and convert with Swap when it chooses, seeing the rate and fee first. Invoicing lets you state gross, WHT and net lines clearly. The Nigeria-side explainer on getting credit notes back is withholding tax on invoices.
What to check first
- Which WHT category does your service fall into: professional fees (10%) or other services (5%)?
- Does your contract say whether fees are gross or net of WHT?
- Has your Nigerian client agreed to send a WHT receipt for each payment?
- Do you have a Nigerian Tax ID, to avoid the doubled no-TIN rate?
Questions people ask
What is the Nigerian withholding tax rate on consulting fees paid to an Italian company?
10% for a non-resident company under the 2024 Withholding Regulations, as shown by PwC in May 2026. Resident companies suffer 5%.
Does the Italy–Nigeria tax treaty reduce withholding tax?
No. The FIRS's 2022 circular records that the Italy treaty covers only air and shipping income, so domestic rates apply to fees, dividends, interest and royalties.
Is Nigerian WHT a final tax for a foreign company?
PwC says WHT on a non-resident company's technical, professional, management and consultancy fees is final, unless the company has a taxable presence in Nigeria.
What proof should I get from my Nigerian client?
A WHT receipt issued by the payer showing your name, gross amount, tax deducted and the month. Keep it with the invoice.
Sources
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- FIRS Information Circular 2022/15 on claiming tax treaty benefits (KPMG-hosted copy) · accessed Oct 2026
- Mondaq (KPMG): The Nigeria Tax Act and non-resident companies (13 Aug 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.