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Part of the guideHow to get paid in Nigeria: transfers, checkout and invoices
The short answer
When a Nigerian business customer pays your invoice, it often deducts withholding tax (commonly 2%, 5% or 10% depending on the service) and pays that amount to the tax authority on your behalf. The deduction is not lost: the customer must give you a receipt or credit note, and you can use it against your own income tax. The work is in recording each deduction against the invoice and collecting the paperwork before year end.
Invoice ₦2 million, receive ₦1.9 million, and it is tempting to think the customer has short-paid you. Usually they have deducted withholding tax (WHT) as the law requires. Whether that ₦100,000 becomes a tax credit or a write-off depends on what you do next. This article covers the recovery side; the overview sits in our guide to getting paid in Nigeria.
The rules in 2026
Since 1 January 2026, the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 have been in force, and the Federal Inland Revenue Service has become the Nigeria Revenue Service (NRS). The detailed WHT rates and procedures still come from the Deduction of Tax at Source (Withholding) Regulations 2024, which took effect on 1 January 2025. As of October 2026, the common rates for Nigerian-resident suppliers are:
| What you invoiced for | Rate deducted (resident company or individual) |
|---|---|
| Supply of goods, where you are not the manufacturer | 2% |
| Consultancy, technical, management and professional fees | 5% |
| Other services not separately listed | 2% |
| Construction of roads, bridges, buildings and power plants | 2% |
| Other construction and related work | 5% |
| Commission and brokerage | 5% |
| Rent, hire and lease | 10% |
- No TIN, double rate. Suppliers without a Taxpayer Identification Number face double the normal rate. From 2026, every taxable person and business needs a Tax ID, even if exempt from income tax.
- Small transactions. Small businesses do not need to deduct on transactions of ₦2 million or less in a month, as long as the supplier has a valid TIN.
- Receipts. A customer who deducts WHT must give the supplier a receipt for the amount deducted.
- Credit even if not remitted. Under the 2024 regulations, the supplier can claim credit for WHT deducted even if the customer has not yet paid it over to the tax authority.
- Remittance timing. Companies remit WHT on payments to companies to the federal authority by the 21st of the following month; WHT on payments to individuals goes to the relevant state tax authority by the 30th.
Worked example: a consultancy firm's year
A Lagos IT consultancy invoices four corporate clients a total of ₦48 million in fees over the year, before VAT. Each client deducts 5%.
| Client | Fees invoiced | WHT deducted (5%) | Cash received (before VAT) | Credit note received by year end |
|---|---|---|---|---|
| Bank | ₦18,000,000 | ₦900,000 | ₦17,100,000 | Yes |
| Telecoms company | ₦14,000,000 | ₦700,000 | ₦13,300,000 | Yes |
| Manufacturer | ₦10,000,000 | ₦500,000 | ₦9,500,000 | Two of four quarters |
| Oil services firm | ₦6,000,000 | ₦300,000 | ₦5,700,000 | No |
| Total | ₦48,000,000 | ₦2,400,000 | ₦45,600,000 | ₦1,850,000 documented |
The firm has ₦2.4 million of tax already paid on its behalf, but paperwork for only ₦1.85 million. If its income tax for the year comes to ₦3 million, documented credits reduce the bill to ₦1.15 million. The missing ₦550,000 of credits, half the manufacturer's deductions and all of the oil services firm's, has to be chased or it may be paid twice. Note that professional and consulting firms cannot qualify as small companies under the new Act, whatever their size, so this firm pays company income tax and needs every credit.
How to get your credit notes back
- Put your TIN and full legal name on every invoice. A mismatch between your invoice and the customer's WHT schedule is the most common reason a credit goes astray.
- State the expected WHT on the invoice. Show the gross amount, the rate you expect, and the net you expect to receive. Customers' accounts teams then deduct the right amount.
- Record the deduction when the payment lands. Match the net cash to the invoice and post the difference to a "WHT receivable" account, not to bad debt or discounts.
- Keep a register. One line per invoice: customer, invoice number, gross, rate, WHT amount, date paid, date receipt or credit note received.
- Chase monthly. Send each customer a statement of WHT deducted but not yet documented. Ask for receipts after their remittance deadline has passed.
- Check the tax portal. Where the authority's system shows credits remitted in your TIN, compare them with your register.
- Escalate before year end. Credits still missing two months before your filing date go to the customer's finance manager, with the invoice and payment evidence attached.
When a customer will not produce the paperwork
Some customers deduct and then stall. Keep the evidence that the deduction happened: your invoice, their remittance advice showing the net payment, and your WHT register entry. A customer that deducts tax but does not remit it becomes liable for that tax and faces penalties, so a polite reminder of their own exposure often moves things along. If a large customer repeatedly fails to issue receipts, raise it at contract renewal and make receipts within a set period a written term of supply.
Common mistakes
- Posting WHT as a discount
- It disappears from your books and you forget to claim it.
- Chasing the customer for the shortfall
- The customer has done what the law requires; ask for the receipt, not the money.
- Wrong rate deducted
- A customer applies 10% to a 5% service, or doubles it because your TIN was missing. Correct the TIN and ask for an adjustment.
- Including VAT in the WHT base
- WHT is generally worked out on the value excluding VAT. Show VAT on its own line so the calculation is clear.
- Leaving it to year end
- Customers' staff change and records get harder to trace. Monthly chasing recovers far more.
WHT short-payments are one of the main exception types in payment reconciliation, and the national e-invoicing system is changing how invoices themselves are issued for larger businesses.
Where Pryme fits
Pryme also offers invoicing for business accounts; check its page for what the current release covers before you build a process around it. Whatever tool you use, record each deduction against the invoice and keep the credit note, so it is not lost as a shortfall. Business accounts also come with agents built and certified by Pryme Intelligence, a separate company: an agent prepares the work inside a mandate with a ceiling you set, nothing moves without approval, above the ceiling a person decides, and every step is recorded on an audit trail. See the payments guide for the wider picture.
Questions people ask
Why did my customer pay less than my invoice in Nigeria?
Most likely they deducted withholding tax, commonly 2% for goods and general services, 5% for consultancy and professional fees and 10% for rent. Ask for the WHT receipt or credit note.
How do I claim withholding tax credit in Nigeria?
Keep the receipt or credit note for each deduction and use the total against your income tax when you file. Under the 2024 regulations you can claim credit for WHT deducted even if the customer has not yet remitted it.
What happens if I do not have a TIN?
Customers deducting WHT apply double the normal rate, and the small-transaction exemption does not apply. Register for a Tax ID and show it on every invoice.
Is withholding tax deducted on VAT?
WHT is generally calculated on the invoice value excluding VAT. Show VAT separately so the customer deducts on the right base.
When must customers pay WHT to the tax authority?
Under the 2024 regulations, by the 21st of the following month for deductions from companies, and by the 30th for deductions from individuals, which go to the state tax authority.
Sources
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- Forvis Mazars: 2024 WHT Regulations overview · accessed Oct 2026
- BusinessDay: Nigeria's withholding tax reforms, key changes and implications · accessed Oct 2026
- Techpoint Africa: Guide to the Nigerian tax reform Acts · 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.