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The short answer
Under section 51 of the Nigeria Tax Administration Act 2025, anyone making a payment covered by the deduction-at-source regulations must deduct tax at the prescribed rate when the payment is made, and remit it by the 21st day of the following month. The deduction is the final tax for non-residents on dividends, interest, rent, royalties, directors' fees and payments to entertainers and sportspersons; failing to deduct costs 40% of the amount not deducted.
The rules at a glance (as of October 2026)
| Rule | What the law says | Section (NTAA 2025) |
|---|---|---|
| Duty to deduct | The payer deducts at the rate in the deduction-at-source regulations when payment is made or settled | s.51(1) |
| Final tax for non-residents | Dividend, interest, rent, royalty, directors' fees and payments to entertainers and sportspersons | s.51(2) |
| Dividends | Dividend received after deduction is franked investment income, not taxed again | s.51(3) |
| Short-term securities and corporate bonds | Interest earned by an individual after deduction is not taxed further | s.51(5) |
| Employees | PAYE is deducted from emoluments so the year's deductions equal the tax due | s.51(6)-(7) |
| Non-residents serving labelled startups | 5% deduction on technical, consulting, professional or management fees, as final tax | s.51(8) |
| Remittance deadline | By the 21st day of the month after deduction | s.107(1) |
| Returns | Monthly returns to the appropriate tax authority, as the regulations specify | s.28 |
| Final tax and income | Income on which deduction is final is removed from an individual's total income | NTA s.28(2)(b)(iv) |
Where the rates are set
Neither the Nigeria Tax Act 2025 nor the Tax Administration Act 2025 contains a general table of withholding rates. Section 51(1) and (9) of the Administration Act point to "regulations relating to deduction of tax at source", which set the rate for each kind of payment and the thresholds. Section 198(b) of the Nigeria Tax Act keeps regulations, notices and circulars made under the repealed Acts in force as if made under the new law, except where they are inconsistent with it.
The 5% rate in section 51(8), for non-resident companies providing technical, consulting, professional or management services to a labelled startup, is set by the Act itself and is a final tax. Where it is unclear whether a payment falls within the regulations, a payer can ask the tax authority for an advance ruling under NTAA section 73.
Deadlines and paperwork
- Deduct at the time of payment or settlement, including where the amount is settled by set-off.
- Remit the tax to the relevant authority by the 21st day of the following month. Companies' and non-residents' deductions go to the NRS; deductions from resident individuals generally go to the state internal revenue service where the individual is resident.
- File the monthly deduction return the regulations require (NTAA s.28).
- Keep the payment and deduction records with the invoice; section 193(1) of the Nigeria Tax Act treats income taxed by deduction at source as income charged to tax, so the records are part of both parties' tax computations.
- Give the payee evidence of the deduction so they can claim credit. The payee uses it against its income tax, and a person who suffered deduction at source cannot be refused a tax clearance certificate for that year, once any balance has been paid (NTAA s.72(5)).
Existing guides cover the payee side: getting your credit notes back, withholding tax on interest and withholding tax for non-resident companies.
Penalties for getting it wrong
| Failure | Consequence | Section (NTAA) |
|---|---|---|
| Not deducting, collecting or withholding tax due | Administrative penalty of 40% of the amount not deducted | s.105 |
| Deducting but not remitting by the 21st | The amount itself, plus 10% a year of the amount, plus interest at the CBN monetary policy rate | s.107(1) |
| Failing to self-account when required | The tax, plus 10% a year, plus interest at the CBN monetary policy rate | s.107(2) |
| Conviction for non-remittance | Up to three years' imprisonment, or a fine of at least the principal plus up to 50%, or both | s.107(3) |
| Government bodies that deduct and do not remit | The Accountant-General can be directed to deduct the sum from their allocation | s.80, Fourth Schedule |
Worked example (illustrative figures)
A company pays a supplier ₦2,000,000 on 10 March and should deduct ₦100,000 under the regulations, but deducts nothing. The section 105 penalty is 40% × ₦100,000 = ₦40,000, and the company remains exposed for the tax itself. If it had deducted the ₦100,000 and remitted it on 21 June instead of 21 April, it would owe the ₦100,000, 10% a year on it for the two months late (about ₦1,667), and interest at the monetary policy rate. The ₦100,000 figure is an assumption for the example, not a published rate.
Business accounts that pay many suppliers often hold deductions in a separate balance until remittance; Pryme's bulk payouts and Finance agent can prepare the payment and the schedule, with a person approving the transfer.
How we put this together
We read the gazetted texts of the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 (Official Gazette No. 117, Vol. 112, dated 26 June 2025) section by section. The Nigeria Revenue Service website lists these Acts on its laws page, but its topic pages load in the browser and could not be read by our tools, so we worked from copies of the Gazette hosted by a third party and checked figures against the section and schedule numbers quoted here. Regulations, practice notes and orders issued after the Acts may change how a rule applies; where something depends on an order or regulation we say so. The example's figures are invented to show how the penalty sections work.
Questions people ask
When is withholding tax due for remittance in Nigeria?
By the 21st day of the month after the deduction, under section 107 of the Nigeria Tax Administration Act 2025. Late remittance attracts a 10% annual penalty and interest.
What is the penalty for not deducting withholding tax in Nigeria?
An administrative penalty of 40% of the amount that should have been deducted, under section 105 of the Nigeria Tax Administration Act 2025.
Is withholding tax a final tax in Nigeria?
For non-residents it is final on dividends, interest, rent, royalties, directors' fees and payments to entertainers and sportspersons. For residents it is generally a credit against income tax, though dividends and some interest for individuals are not taxed again.
Where are the withholding tax rates in Nigeria published?
In the deduction-at-source regulations referred to in section 51 of the Nigeria Tax Administration Act 2025, published on the NRS laws and regulations page, not in the Acts themselves.
Sources
- Nigeria Tax Administration Act, 2025 (Act No. 5), Official Gazette No. 117, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Nigeria Tax Act, 2025 (Act No. 7), Official Gazette No. 117, Vol. 112, 26 June 2025 (gazetted copy) · accessed Oct 2026
- Nigeria Revenue Service (Establishment) Act, 2025 (Act No. 4), Official Gazette No. 117 (gazetted copy) · accessed Oct 2026
- Nigeria Revenue Service: Laws and regulations · 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.