Withholding Tax in Nigeria — The Plain English Version

Your client owes you ₦500,000. They pay ₦450,000. No explanation.

This is almost certainly Withholding Tax — and it is not theft, it is not an error, and you have not been cheated.

Here is what actually happened.

What your client did (and why they had to)

When a Nigerian company pays another business for certain services, they are required by law to hold back a percentage of the payment and send it directly to the tax authority. This is called Withholding Tax — WHT.

They did not keep the money. They sent it to NRS on your behalf. In their records, it has been filed as tax paid in your name.

Think of it this way: The government decided it did not want to wait until year-end for part of your tax. It asked your client to collect it early, directly from your payment.

How much do they deduct?

It depends on what you do:

So on a ₦500,000 invoice for consulting: your client deducts ₦50,000 and pays you ₦450,000. The ₦50,000 goes to NRS.

Is this money gone forever?

No. This is the part most Nigerian freelancers and MSME owners miss.

That ₦50,000 is sitting in your tax account at NRS. When you file your annual tax return, you can use it to reduce what you owe. If you owe ₦80,000 in income tax for the year and you have ₦50,000 in WHT credits, you only pay ₦30,000.

If your WHT credits are more than your total tax bill, you can claim a refund or carry the excess forward to next year.

The money is not gone. It is pre-paid tax. You get it back at year-end — but only if you have the receipt.

The receipt you need: the WHT credit note

After your client pays WHT to NRS, they are supposed to send you a document called a WHT credit note (sometimes called a WHT receipt or credit certificate). It confirms how much was paid on your behalf.

This document is how you claim the credit at year-end. No credit note = no claim = money wasted.

Most Nigerian business owners never ask for it. This is how they end up paying tax twice.

Your action: 30 days after every payment from a company client, send this message:

"Hi [Name], just following up on the WHT credit note for Invoice [number]. Could you let me know when that will come through?"

It is your money. Ask for it.

The three things to remember

Your client is required to deduct WHT — it is their legal obligation, not a choice
The money was sent to NRS in your name — it is not lost, it is pre-paid tax
You must collect the WHT credit note — without it, you cannot reclaim the credit at year-end

That is it. If you understand those three things, you understand Withholding Tax well enough to protect your business.

Want the full detail?

This post covers the essentials. For the complete picture — rates by service type, how to show WHT on your invoices, common mistakes, and how to track your credits — read the full guide:

Withholding Tax in Nigeria: Complete Guide for Business Owners →

Lex, Lucrive's AI tax assistant, can answer specific WHT questions based on Nigerian legislation. Free to use — 10 questions per month. Start at lucrive.io.

Sources & further reading