Under the Nigeria Tax Act 2025 and the associated Withholding Tax Regulations 2024, the government has moved away from taxing "every single payment" and instead focuses on specific categories.
The goal of the 2026 regime is to provide clarity—removing the old, vague rule of "all contracts in the ordinary course of business" and replacing it with a definitive list of taxable transactions.
1. Transactions Subject to WHT (2026 Rates)
The following transactions require you to deduct tax at source when making a payment:
| Transaction Category | Resident Rate | Non-Resident Rate |
|---|---|---|
| Dividend, Interest, Rent | 10% | 10% |
| Royalties | 5% (Indiv) / 10% (Co) | 5% (Indiv) / 10% (Co) |
| Consultancy, Professional, Management Fees | 5% | 10% |
| Commission & Brokerage Fees | 5% | 10% |
| Technical & Specialized Services | 5% | 10% |
| Construction (Roads, Bridges, Power Plants) | 2% | 10% |
| Other Construction & Related Activities | 5% | 10% |
| Supply of Goods/Contracts | 2% | 10% |
| Director’s Fees | 20% | 20% |
| Lottery/Gaming Winnings | 15% | 15% |
Crucial Rule: If the vendor does not have a TIN, you must double the rate shown above (e.g., a 2% supply becomes 4%).
2. Transactions EXEMPT from WHT (New for 2026)
The biggest change in the new law is the list of things you no longer have to worry about. You do not deduct WHT on:
- Small Business Payments: Any transaction where the payment is ₦2 million or less in a month, provided the supplier has a valid TIN and turnover below ₦100m.
- Manufacturer Supplies: Goods bought directly from the person who manufactured or produced them.
- Retail/Over-the-Counter Sales: Buying items from a supermarket or retail shop.
- Essential Utilities: Airtime, internet data, electricity bills, and airline tickets.
- Fuel Products: PMS (Petrol), AGO (Diesel), Gas (LPG/CNG), and Kerosene.
- Out-of-Pocket Expenses: If a consultant lists their flight or hotel separately from their fee and attaches receipts, you only tax the fee, not the expenses.
- Insurance Premiums: These are now explicitly exempt from WHT.
3. When to Deduct?
The 2025 Act clarifies the "Trigger Point." You must deduct WHT at whichever happens first:
- When the Payment is Made: Cash, transfer, or cheque.
- When the Liability is Recognized: When you enter the invoice into your books as an "Account Payable," even if you haven't paid yet.
Summary Tip for Your Business
If you are doing a "supply" (e.g., supplying stationery or equipment), your WHT rate is now 2% (down from the old 5%). If you are providing "brain work" (consulting, training, legal), the rate is 5%.