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Can WHT Credit Note be used to Offset Late Returns Penalty (LRP)?

No, WHT Credit note cannot be used to offset LRP. Penalty is not tax, WHT Credit note can only be used to offset income tax due.

Is mobilisation fee liable to WHT?

Yes. Mobilisation fee is liable to WHT. In addition, every certificate of work done issued at the different stages of a contract must be subjected to 5% WHT. However, the amount of WHT being deducted at source from the mobilisation fee paid at the inception of the contract should be adjusted (deducted) from the WHT due on the next payment in respect of the certificate of work done issued and the balance should be remitted to the relevant tax authority.

Is there any exemption from Withholding Tax?

Yes, there are certain transactions that are exempted from WHT. They include:

i.             Direct purchase across the counter,

ii.            Direct purchase of raw materials from supplier as distinct from contract of supplies

iii.           Sale in the ordinary course of business.

iv.          All direct import goods.

i.             Inter- bank interest.

ii.            Income exempted from income tax

iii.           Claims in insurance business

iv.          Interest on Bonds

v.            Dividends redistributed by Holding Companies

What are the Contents of Withholding Tax Credit Note?

Withholding Tax Credit Note will generally include the following information:

·         Credit note Number;

·         The name of the agent/taxpayer who deducted and remitted the WHT;

·         The name of beneficiary from whose income WHT was deducted;

·         The nature of transaction;

·         The date of the transaction;

·         The name of the bank through which remittance was effected;

·         The amount deducted;

·         The period covered.

What are the relevant documents required for filing WHT Returns?

Relevant documents for filing WHT includes:

             i.        Evidence of payments to an authorised bank – e-ticket

            ii.        Schedule of WHT deducted showing:

·         Period covered

·         Name of supplier 

·         Addresses

·         Nature of supply

·         Gross amount

·         WHT rate

·         WHT amount

·         TIN of agent making remittance

·         TIN of beneficiary (taxpayer).

What is the content of remittance schedule of Withholding Tax Returns?

i. Name and address of the Agent/Depositor.

ii. TIN of the Agent/Depositor

iii. The name and address of the Taxpayer/Beneficiary

iv. TIN of the Taxpayer/Beneficiary

v. The nature of transaction

vi. The gross value of the business on which WHT is being deducted

vii. The applicable rate of WHT

viii. The amount of WHT deducted.

ix. Period covered

What is the difference between Withholding Tax (WHT) and Value Added Tax (VAT)?

Withholding Tax is paid to the Relevant Tax Authority either State Revenue Service or Federal Inland Revenue Service, depending on whether the taxpayer is a corporate body or an individual. VAT on the other hand, can only be paid to the Federal Inland Revenue Service under the Nigerian Tax Laws.

VAT is a form of indirect tax (Consumption) while Withholding Tax is a direct tax (Income).

Withholding Tax is deducted from income while VAT is added to the invoiced value of goods and services.

The individual who suffered Withholding Tax has the right to set it off against future tax liability, VAT cannot be so set-off.

What is the due date for remitting WHT Returns?


The due date for remitting WHT returns is within 30days from the date the tax was deducted or the time the duty to deduct the tax arose.

What is the rate of Withholding Tax for Companies and Individuals on Transactions?

Rates of WHT for corporate companies and individuals on transactions are as follows:-

TRANSACTIONS

COMPANIES (%)

INDIVIDUALS (%)

Royalties

10

5

Contract of Supplies

5

5

Contract of Construction

2.5

2.5

Dividend

10

10

Technical Service

10

5

Professional Service

10

5

Consultancy

10

5

Management Service

10

5

Commission

10

5

Rent

10

10

Interest

10

10

Hire, Charter, Lease

10

10

Directors fees

10

10

What is Withholding Tax (WHT)?

Withholding Tax is basically an advanced payment of income tax which may be used to offset or reduce tax liabilities. WHT is also an advance tax to be applied as tax credit to settle the income tax liability of the year of assessments to which the income that suffered the deduction relates. 

What is Withholding Tax Credit Note?

This is the document issued by the Tax Authority showing that a taxpayer has suffered tax deduction at source.

Who are the collecting Agents of WHT?

The collecting agents of WHT are-

·         Corporate bodies (companies);

·         Individuals, firms and sole traders;

·         A statutory body, a public authority and other institutions or organisations;

·         Government Ministry, Department or Agency and Local Government.