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The short answer
Usually not, if the contractor works from Nigeria. Canada's Income Tax Regulations, section 105, require you to withhold 15% of a fee paid to a non-resident only "in respect of services rendered in Canada". Work done entirely in Lagos or Abuja is outside that rule, but any part of the job done in Canada, such as a week on site in Toronto, is caught, so record where the work is performed.
What Regulation 105 says
Section 105(1) of the Income Tax Regulations is short. Every person paying a non-resident "a fee, commission or other amount in respect of services rendered in Canada, of any nature whatever" must withhold 15% of the payment. Section 105(2) excludes payments that count as employment remuneration (which have their own payroll rules) and certain payments to registered non-resident insurers and authorised foreign banks.
The key words are "rendered in Canada". The rule follows the place where the service is physically performed, not where the client is, where the invoice is sent or where the money lands. A developer in Port Harcourt coding for your Montreal start-up renders the service in Nigeria.
Three common situations
| Situation | Regulation 105 withholding? |
|---|---|
| Nigerian contractor works only from Nigeria, paid by your Canadian company | No, nothing is rendered in Canada |
| Same contractor flies to Toronto for a two-week workshop | Yes, on the part of the fee for the work done in Canada |
| Contractor is really your employee | Regulation 105 does not apply to remuneration; employment and payroll rules apply instead |
Splitting a mixed contract
When a job is done partly in each country, the fee needs to be split on a reasonable basis, such as days worked in each place. Put the split in the contract or the invoice so the 15% is applied only to the Canadian part.
Example only. A contract pays CAD 8,000 for a project taking 20 working days, five of them in Calgary. The Canadian portion is 5 ÷ 20 × CAD 8,000 = CAD 2,000. You withhold 15% of that, CAD 300, and pay the contractor CAD 7,700. The CAD 300 goes to the CRA in the contractor's name.
Withholding under Regulation 105 is a payment on account, not necessarily the final tax. The Canada–Nigeria tax agreement (signed 4 August 1992, in force 16 November 1999) may affect how much Canadian tax the contractor finally owes; we did not open the treaty text. We also could not open the CRA's Regulation 105 guidance page in October 2026, so check it, or ask the CRA, about any waiver or reduction, remittance deadlines and slip reporting before the contractor travels.
What you should keep for a Nigeria-only contractor
If the CRA later asks why you did not withhold, your answer is evidence that the work was done in Nigeria.
- A contract stating that services are performed outside Canada, and naming the contractor's country of residence.
- Invoices from the contractor with their Nigerian address.
- Timesheets or milestone reports, if you have them.
- Travel records if the contractor ever came to Canada, so you can show which days were affected.
- Proof of payment and receipts.
Contract wording that helps
A few lines in the services agreement make the position clear for both sides and for anyone reviewing your books later.
- Place of performance: "The Contractor will perform the Services from Nigeria. Any Services performed in Canada require the Company's prior written approval."
- Travel: "Where Services are performed in Canada, the Contractor will record the days worked in Canada on the relevant invoice."
- Withholding: "The Company may deduct any tax it is required by law to withhold and will provide evidence of the amount remitted."
- Residence: the contractor confirms their country of tax residence and agrees to tell you if it changes.
Ask the contractor to tell you before any trip to Canada that involves work, even a short client visit. A conference attended for personal development is different from three days of paid workshops; the invoice should make clear which days, if any, were work performed in Canada.
The withholding clause matters most. Without it, a contractor who visits Canada may argue that a 15% deduction breaches the agreed fee.
The Nigerian side
Nigerian withholding tax is a separate system run by Nigerian payers. PwC's Nigeria withholding table (reviewed 29 May 2026) sets rates for payments by Nigerian payers, such as 5% or 10% on professional fees depending on residence. Whether a Canadian company with no Nigerian presence is expected to deduct Nigerian withholding was not settled on any page we read, and in practice Canadian payers generally do not. The contractor is responsible for their own Nigerian tax; DLA Piper's August 2026 note says someone living in Nigeria and earning from foreign employers must register for tax there.
Do not confuse the two questions
Whether to withhold is different from whether the person is a contractor at all. If you control their hours, provide equipment and treat them as staff, they may be an employee, which changes the analysis in both countries. This is information, not tax advice.
Where Pryme fits
Paying a contractor in Nigeria is simpler when you can pay in the currency agreed. A Pryme Business Account holds CAD, USD and naira; bulk payouts handle several contractors at once; and verifiable receipts through Pryme's VerifyDoc.ai partnership give you proof of each payment. See also employee or contractor and Nigerian withholding on consultant fees.
Questions people ask
Do I withhold 15% when paying a contractor in Nigeria?
Not under Regulation 105 if all the work is done in Nigeria. The 15% applies only to fees for services rendered in Canada.
What if my Nigerian contractor visits Canada to work?
The part of the fee for the work done in Canada is subject to 15% withholding. Split the fee on a reasonable basis such as days worked.
Is the 15% the contractor's final Canadian tax?
Not necessarily. It is withheld on account; the Canada–Nigeria treaty and the contractor's own filing may reduce the final amount. Check the CRA's guidance.
Do I deduct Nigerian withholding tax as a Canadian payer?
Nigerian withholding is generally operated by Nigerian payers. We found no page settling the position for a Canadian company with no Nigerian presence; take advice if you have a Nigerian entity.
Sources
- Justice Laws: Income Tax Regulations, C.R.C., c. 945, section 105 · accessed Oct 2026
- Publications.gc.ca: Canada–Nigeria agreement for the avoidance of double taxation (signed 4 Aug 1992, in force 16 Nov 1999) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (reviewed 29 May 2026) · accessed Oct 2026
- DLA Piper Africa: FAQs on payroll taxes and employer liability in Nigeria (28 Aug 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.