Who We Are
Welcome to the Oyo State Withholding Tax Portal—your comprehensive resource for understanding and managing Withholding Tax in Oyo State, Nigeria.
We educate the public about the Withholding Tax System, demystifying tax laws and regulations to promote transparency and understanding.
We also equip tax agents and taxpayers with innovative IT tools that facilitate accurate tax computation and seamless payment processes while enhancing the capabilities of the Oyo State tax authority in monitoring compliance, assessing taxes for high net-worth individuals, and efficiently accounting for collected revenues.
What is Withholding Tax
Withholding tax is a portion of income deducted at the source by a payer before payment is made to the recipient. It is an advance income tax payment, which is intended to bring taxpayers such as consultants, contractors, suppliers, landlords, and shareholders into the tax net.
How it Works
The payer deducts the tax at the time of payment and remits it directly to the tax authority on
Who pays Withholding Tax?
It applies to various entities, including employers, companies, and individuals making payments subject to withholding tax.
What Payments Are Subject to Withholding Tax?
Payments such as salaries, dividends, rent, consultancy fees, commissions, and interest may be subject to withholding tax.
Rates of Withholding Tax?
The tax rates vary depending on the type of payment and whether the recipient is a resident or non-resident. Non-residents often face higher withholding tax rates and may have specific treaties that affect their tax obligations.
Types of Withholding Tax
In Nigeria, withholding tax (WHT) applies to various transactions, with specific rates and rules depending on the type of payment. Here's an overview of the types of withholding tax in Nigeria:
Construction Services
Description: Tax on payments for construction services, including repairs, renovations, or engineering works.
WHT Rate:
- Companies: 5%
- Individuals: 5%
Purpose: Captures tax from contractors and subcontractors.
Dividend Payments
Description: Tax deducted from dividends paid to shareholders.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Ensures tax is collected on income from investments.
Interest Payments
Description: Tax deducted from interest payments made on loans, deposits, or bonds.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Tax on earnings from financial instruments.
Construction Services
Description: Tax on payments for construction services, including repairs, renovations, or engineering works.
WHT Rate:
- Companies: 5%
- Individuals: 5%
Purpose: Captures tax from contractors and subcontractors.
Dividend Payments
Description: Tax deducted from dividends paid to shareholders.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Ensures tax is collected on income from investments.
Interest Payments
Description: Tax deducted from interest payments made on loans, deposits, or bonds.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Tax on earnings from financial instruments.
Construction Services
Description: Tax on payments for construction services, including repairs, renovations, or engineering works.
WHT Rate:
- Companies: 5%
- Individuals: 5%
Purpose: Captures tax from contractors and subcontractors.
Dividend Payments
Description: Tax deducted from dividends paid to shareholders.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Ensures tax is collected on income from investments.
Interest Payments
Description: Tax deducted from interest payments made on loans, deposits, or bonds.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Tax on earnings from financial instruments.
Construction Services
Description: Tax on payments for construction services, including repairs, renovations, or engineering works.
WHT Rate:
- Companies: 5%
- Individuals: 5%
Purpose: Captures tax from contractors and subcontractors.
Dividend Payments
Description: Tax deducted from dividends paid to shareholders.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Ensures tax is collected on income from investments.
Interest Payments
Description: Tax deducted from interest payments made on loans, deposits, or bonds.
WHT Rate:
- Residents: 10%
- Non-Residents: 10%
Purpose: Tax on earnings from financial instruments.
Laws Governing Withholding Tax?
In Nigeria, withholding tax (WHT) is governed by several laws and regulations, which outline its applicability, rates, deductions, remittances, and compliance requirements. Here is an overview of the key legal frameworks governing withholding tax in Nigeria:
-
Companies Income Tax Act (CITA), Cap C21 LFN 2004 (as amended)
- Governs withholding tax for companies.
- Specifies WHT rates for various payments made by companies, such as dividends, interest, rents, and contract payments.
-
Personal Income Tax Act (PITA), Cap P8 LFN 2004 (as amended)
- Governs withholding tax for individuals, sole proprietorships, and partnerships.
- Specifies rates for personal income-related payments subject to WHT, including professional fees, rent, and commissions.
-
Value Added Tax (VAT) Act, Cap V1 LFN 2004 (as amended)
- Governs VAT deductions, often discussed in conjunction with WHT for clarity in transactions.
-
Federal Inland Revenue Service (Establishment) Act, 2007
- Establishes the Federal Inland Revenue Service (FIRS) as the main authority responsible for administering withholding tax for companies and residents.
- Empowers FIRS to enforce compliance, impose penalties, and prosecute defaulters.
-
Tax Administration (Self-Assessment) Regulations, 2011
- Provides guidelines for the remittance of withholding tax and filing of returns.
- Introduces deadlines for remittance of withholding tax (e.g., typically 21 days after deduction).
-
Stamp Duties Act, Cap S8 LFN 2004
- Addresses tax deductions related to stamping agreements, contracts, and other chargeable documents, which sometimes overlap with WHT payments.
-
Double Taxation Treaties (DTTs)
- Nigeria has entered into agreements with several countries to avoid double taxation.
- These treaties can reduce withholding tax rates for non-resident entities from treaty countries, subject to compliance with DTT provisions.
-
Circulars and Guidelines Issued by FIRS
- The FIRS periodically issues circulars and updates to clarify WHT application, rates, and compliance requirements for evolving business transactions.
- Example: Guidelines on digital and cross-border transactions.
-
Finance Act (Various Years)
- Recent amendments to tax laws, including the Finance Act 2019, 2020, 2021, and 2022, have introduced updates affecting withholding tax, such as new rates, exemptions, and remittance obligations.
-
State Tax Laws and Internal Revenue Authorities
- For individuals, the relevant state tax authority handles WHT within the state (e.g., Lagos State Internal Revenue Service - LIRS).
- Some states also have specific regulations for WHT on payments like rent or professional fees.
OUR TEAM
MEET OUR TAX ADVISOR
our tax advisor services are designed to provide you with expert guidance and strategic insights tailored to your financial situation. Our team of seasoned tax advisors offers personalized consultations to help you navigate complex tax laws, identify opportunities for savings, and make informed decisions that align with your financial goals. Whether you need assistance with tax planning, investment strategies, or resolving tax-related issues, we are here to provide clear, actionable advice. We work closely with you to understand your unique circumstances, ensuring that you receive the most effective and customized solutions to optimize your tax position and achieve long-term success.
SIMON DE ANDERSON
Senior Advisor
JUlia ANDERSON
Senior Advisor
David Miller
Tax Advisor
Martin Smith
Tax Advisor