Yes, withholding tax (WHT) is applicable to payments for goods, but under the Nigeria Tax Act 2025 and the 2024 WHT Regulations, there are now massive exemptions.
Here is the "Yes, but..." breakdown for 2026:
1. The General Rule: 2% Rate
If you are buying goods from a standard supplier (who is not the manufacturer), the WHT rate is 2%.
- Old Law: This used to be 5%.
- Condition: This only applies if the transaction is part of a formal contract or bulk supply.
2. The Big "Exemptions" (When you DON'T pay WHT)
The new law has made life much easier for small businesses and those buying essential items. You do not deduct WHT on the following:
- Direct from Manufacturer: If you are buying goods directly from the person or company that produced or manufactured them, there is 0% WHT. This is to encourage local production.
- Small Business Threshold: If the transaction is ₦2 million or less and the supplier has a TIN, you do not need to deduct WHT.
- Across-the-Counter Sales: If you walk into a shop or supermarket, buy goods, and pay instantly (cash or POS) without a prior formal contract, you do not deduct WHT.
- Essential Items: No WHT is deducted on:
- Fuel products (Petrol/PMS, Diesel/AGO, Gas/LPG, Kerosene).
- Utilities (Electricity, Phone Airtime, Data).
- Airline Tickets.
- Imported Goods: If you are buying from a foreign supplier who doesn't have a physical "taxable presence" in Nigeria, you don't deduct WHT on the goods (though you will pay VAT and Duties at the port).
3. Summary Table for Goods (2026)
| Scenario | WHT Rate | Action Required |
|---|---|---|
| Buying from a Manufacturer | 0% | None (Exempt) |
| Buying from a Wholesaler/Distributor | 2% | Deduct and remit to NRS |
| Transaction ≤ ₦2m (with TIN) | 0% | None (Exempt) |
| Vendor has NO TIN | 4% | Double Rate Penalty |
| Buying Petrol or Diesel | 0% | None (Exempt) |
The "Manufacturer" Pro-Tip
If you are a supply company buying from a factory to deliver to a client:
- You don't suffer WHT when buying from the factory (Manufacturer Exemption).
Your Client will likely deduct 2% from you when they pay you (because you are a "distributor/supplier," not the manufacturer).