What is in the new withholding tax table 2024 in Nigeria

A recent withholding tax table has been released by the federal government of Nigeria. From 2024, companies are expected to withhold this tax using the current rates for individuals and businesses. We have summarized this table along with other information you need to know.

1. The new withholding tax regime

Withholding tax (WTH) are fixed tax rates withheld by a company in advance and on behalf of another taxpayer. The sum is accumulated at the end of the month and paid to the relevant tax authorities. Usually, withholding tax is paid on the 21st of every month. And the tax is withheld to ensure that the taxpayer does not avoid such tax payment. Therefore, a withholding tax can be claimed by the taxpayer while filling in his/her taxes. 

With the new regime, small businesses are exempted from WTH up to 2 million Naira. There are also certain transactions that are exempted from paying an advance taxation. An example is a transaction manufactured by the individual or company making the supply. Companies and individuals who supply petrol, liquid gas, compress natural gas, kerozine, gas oil, and jet oil are exempted.

However, income from gaming will be taxed using this system starting from October 1st, this year. Thereby widening the tax net of the Nigerian government. More so, it ensures that all taxpayers have a tax ID or TIN number to prevent people from invading taxes. Individuals without an ID or TIN will pay double the taxes. 

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2. List of transactions and their WTH rate

• Dividends and Interest: 10% for all taxpayers, that is, corporate or individual taxpayers.
• Royalties: 10% for corporate, 5% for resident individuals, and 10% for non-resident individuals.
• Commission, consultancy, technical, management, and professional fees: 5% for residents corporate and individual. 10% for non-residents corporate and individuals.
• Supply of goods other than by manufacturer: 2% for resident individuals and corporations.
• Colocation and telecommunication tower services: 2% for residents corporate and individual. 5% for non-residents corporate and individual.
• Supply or rendering of services other than those specifically stated: Same as above
• Construction of road, bridges, building and power plants: Same as above
• Any other form of construction and related activities: 5% for residents and 10% for non-residents.
• Brokerage fee: Same as above
• Directors' fees: 15 percent for resident individuals and 20% for non-residents corporate.
• Compensation for loss of employment: 10% for all individuals.
• Entertainment and sportspersons: Not withheld for residents and 15% for non-residents.
• Winnings from lottery, gaming, reality shows (other than those listed as exempt): Not available for corporate but 5% and 15% for resident and non-resident individuals respectively.

3. Conclusion

The new withholding tax rates are flexible compared to the previous one. They can be classified as progressive tax system because it considers the income of individuals and corporations. As a result, it can be referred to as a fair tax system.