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The short answer
A Nigerian subsidiary paying its US parent deducts 10% withholding tax on dividends, interest, royalties and technical, management, consultancy or professional fees, and 5% on other services, per PwC (May 2026). There is no US-Nigeria tax treaty to reduce these rates. WHT is filed by the 21st of the following month, and on related-party payments it is due when the liability is recognised if that is earlier than payment.
The rates
| Payment to the US parent | Non-resident corporate rate |
|---|---|
| Dividends | 10% |
| Interest | 10% |
| Royalties | 10% |
| Commission, consultancy, technical, management or professional fees | 10% |
| Rent, hire or lease | 10% |
| Other services not specifically listed | 5% |
Source: PwC Worldwide Tax Summaries, Nigeria corporate withholding taxes, last reviewed 29 May 2026. For comparison, resident companies are deducted 5% on professional and management fees and 2% on other services, so the non-resident rates are double.
No treaty relief
PwC's treaty table shows reduced rates for some countries, but no United States entry, and the IRS's own list of US income tax treaties (reviewed 3 Jan 2026) does not include Nigeria. The non-treaty rate is therefore the rate. A US parent cannot use a Form W-8 or a residence certificate to bring it down.
Is the WHT the final tax?
For technical, consulting, professional and management (TPMC) services provided by a non-resident company, PwC says the WHT "shall be the final tax". KPMG's analysis of the Nigeria Tax Act (via Mondaq, 13 Aug 2025) adds that a non-resident providing such services can have a significant economic presence on income from a Nigerian resident, and that WHT on services from abroad is a final tax. For dividends and interest, the WHT is generally the end of the Nigerian liability for a non-resident with no permanent establishment, but have your adviser confirm this for your structure, especially if US staff spend time in Nigeria.
Timing: the related-party rule
WHT is filed by the 21st of the month following payment. For related parties, PwC notes the deduction is due at the earlier of payment or when the liability is recognised. In plain terms: if the subsidiary books a $100,000 management fee payable to the parent in December, the WHT is due in January even if the cash does not move until June. Late remittance carries a 10% penalty plus interest at the CBN Monetary Policy Rate.
Worked example
Example only, at an assumed ₦1,500 to $1. The subsidiary accrues a $100,000 management fee to the parent in December 2026.
- Naira value: ₦150,000,000
- WHT at 10%: ₦15,000,000, remitted to NRS by 21 January 2027
- Net due to parent: ₦135,000,000, or $90,000 at the same assumed rate
- Separately, self-accounted VAT on the imported service at 7.5%: ₦11,250,000 (see VAT on intercompany services)
The contract should say whether the fee is gross or net of WHT. If it promises the parent $100,000 net, the subsidiary must gross up: $100,000 / 0.9 = $111,111 gross, with $11,111 of WHT.
Classifying the payment
Because the rates differ, the label on the payment matters. A software licence fee charged by the parent is likely a royalty at 10%. Interest on an intercompany loan is 10%. A "shared services" recharge for IT support could be a technical fee at 10% or an "other service" at 5%, depending on what is actually provided, and the tax authority will look at the substance rather than the invoice title. Write the intercompany agreement so each charge is described as what it is, and keep the WHT receipts the subsidiary obtains: the parent will need them to show the tax was paid if it claims a credit in the US, and the subsidiary will need them if NRS audits the deduction.
Will the deduction stand?
Paying the parent is one question; deducting the cost in Nigeria is another. PwC's deductions summary says connected-party royalties, management and technical fees must conform with the transfer pricing regulations, and connected-party interest is limited to 30% of EBITDA, with the excess carried forward up to five years. Have a written intercompany agreement, a benchmarked fee and evidence the service was delivered. See transfer pricing between a US company and its Nigerian subsidiary and intercompany loans.
Payments that are not income
Not every transfer to the parent is subject to WHT. Repaying the principal of a documented intercompany loan, or reimbursing a cost the parent paid on the subsidiary's behalf at no mark-up, is not a fee. Keep the evidence that it is a repayment or a pure reimbursement, because without it the tax authority may treat the payment as a service charge.
The US side
The parent receives the net amount and reports the gross income. The IRS says generally only foreign income taxes, war profits taxes and excess profits taxes, or taxes in lieu of them, qualify for the foreign tax credit, and that the amount withheld is not necessarily the qualifying amount. Whether Nigerian WHT on a management fee is creditable for your parent, and how the credit limit applies, is a question for your US tax adviser. Our Nigeria library covers WHT for non-resident companies from the Nigerian side.
Where Pryme fits
The Finance agent can prepare the WHT schedule and the gross-up for review, and a person approves the payment. A Pryme Business Account holds naira for NRS and dollars for the parent; Swap shows the rate and the fee before you approve.
Questions people ask
What is the WHT rate on management fees paid to a US company?
10%, the non-resident rate for technical, management, consultancy and professional fees per PwC (May 2026). There is no US-Nigeria treaty to reduce it.
What is the WHT on dividends paid to a US parent?
10% of the gross dividend.
When is WHT on intercompany payments due?
By the 21st of the month following the earlier of payment or when the liability is recognised in the books.
Can the US parent claim Nigerian WHT as a foreign tax credit?
Possibly, but only qualifying foreign income taxes are creditable and limits apply. Ask a US tax adviser for your structure.
Sources
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (last reviewed 29 May 2026) · accessed Oct 2026
- IRS: United States income tax treaties, A to Z (reviewed 3 Jan 2026) · accessed Oct 2026
- Mondaq (KPMG): The Nigeria Tax Act and non-resident companies (13 Aug 2025) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate deductions (last reviewed 29 May 2026) · accessed Oct 2026
- IRS: Foreign tax credit (updated 9 Jul 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.