NIGERIA WITHOLDING TAX REFORMS : KEY CHANGES AND IMPLICATIONS
Nigeria has recently undertaken significant reforms to its withholding tax (WHT) system with the
introduction of the Deduction of Tax at Source (Withholding) Regulations 2024. This overhaul,
signed into law by the Minister of Finance, marks a pivotal shift in the administration of WHT,
which has been in place for nearly fifty years. The new regulations are set to take effect from July
1, 2024, and aim to streamline tax compliance while promoting a more equitable tax environment
Overview of Key Changes
- Reduction in Withholding Tax Rates: The new regulations introduce several reductions in
WHT rates across various sectors. - Professional Services: The WHT rate for payments to Nigerian companies for
professional, management, technical, and consultancy services has been halved from 10%
to 5%. However, payments made to non-resident companies will still incur a 10% rate. - General Services and Goods: For payments to Nigerian residents for services not classified
under professional categories and for the supply of goods or materials, the WHT rate is
reduced from 5% to 2%. Notably, this excludes transactions classified as “over-the counter” sales. - Construction Payments: The WHT applicable to construction services provided by
Nigerian residents has been reduced from 2.5% to 2%. - Telecommunication Services: Similar reductions apply to co-location and
telecommunication tower services, where the rate is also lowered from 5% to 2