Withholding tax on a contractor payment
Enter the payment, the type of work, whether it is paid to a person or a company, and where they are resident. The answer shows the WHT rate and amount, what the payee receives, and where the tax goes: a person living in Nigeria to their state's revenue service; a company, or a person living outside Nigeria, to the Nigeria Revenue Service.
Figures follow the current withholding tax rates as of the month selected, using the same engine Sawa runs payroll on. They are a guide, not tax advice.
Sawa does this for every person, every month — Ask for a spot or book a demo.
What withholding tax is
When a business pays a contractor, consultant, supplier or landlord, it holds back part of the payment as tax. That part is withholding tax (WHT). The payee receives the rest, and the business pays the tax to the right tax office.
In Nigeria the rules are in the Deduction of Tax at Source (Withholding) Regulations 2024, read with the Nigeria Tax Act 2025. WHT is for payments to contractors and suppliers. Staff on payroll pay PAYE instead; see the PAYE calculator and guide.
WHT rates by type of work
The rate depends on what the payment is for. These are the rates for a payee resident in Nigeria, which is what Sawa applies:
| Type of payment | Rate |
|---|---|
| Contracts & services (general) | 2% |
| Professional / consultancy fees | 5% |
| Construction services | 2% |
| Supply of goods | 2% |
| Rent | 10% |
| Dividends | 10% |
| Interest | 10% |
| Royalties | 10% |
| Directors' fees | 15% |
| Commissions | 5% |
The rate is the same whether the payee is a person or a company. Being a person or a company changes where the tax goes, not how much is held back.
If one invoice covers different kinds of work, each line is taxed at its own rate. Sawa works it out line by line. A payment with no type recorded is treated as general contracts and services, at 2%.
A payee outside Nigeria
There is a separate, mostly higher, table for payees resident outside Nigeria. The calculator above shows it when you choose "Outside Nigeria":
| Type of payment | Rate |
|---|---|
| Contracts & services (general) | 5% |
| Professional / consultancy fees | 10% |
| Construction services | 5% |
| Supply of goods | 5% |
| Rent | 10% |
| Dividends | 10% |
| Interest | 10% |
| Royalties | 10% |
| Directors' fees | 20% |
| Commissions | 10% |
Sawa's payroll does not apply this table yet.
Who the tax goes to
Withholding tax follows the payee, the same way PAYE follows the employee:
- A person who lives in Nigeria: the revenue service of the state they live in.
- A company: the Nigeria Revenue Service.
- A person who does not live in Nigeria, or has no Nigerian state: the Nigeria Revenue Service.
A Tax ID on file, or the lack of one, does not change where WHT goes.
When WHT is due
WHT is counted from the month the contractor is paid, not the month of the invoice. The due date then depends on who it goes to:
- Nigeria Revenue Service: by the 21st of the month after the payment.
- A state revenue service: by the last day of the month after the payment.
So a contractor paid in October means WHT by 21 November if it goes to the Nigeria Revenue Service, or by 30 November if it goes to a state.
The small-business exemption
The regulations include an exemption for small suppliers: a payee with a Tax ID, turnover of ₦50 million or less, and payments of ₦2 million or less in the month. Sawa does not apply it. Sawa takes WHT in full on every contractor payment.
How Sawa handles WHT
In Sawa, WHT is worked out on every contractor payment, line by line on the invoice. The contractor receives the payment less WHT. The tax is grouped by the month the contractor was paid and by tax office, with its due date, and tracked until it is paid. The company pays the tax; Sawa shows what is owed, to whom and by when.
Worked examples
These come from the calculator above, for October 2026.
Example 1: ₦1,000,000 consultancy fee to a person in Lagos
| Line | Amount |
|---|---|
| Payment | ₦1,000,000 |
| WHT at 5% (professional / consultancy fees) | − ₦50,000 |
| The consultant receives | ₦950,000 |
The ₦50,000 goes to the Lagos State Internal Revenue Service. Paid in October, it is due by 30 November.
Example 2: ₦5,000,000 of goods from a company
| Line | Amount |
|---|---|
| Payment | ₦5,000,000 |
| WHT at 2% (supply of goods) | − ₦100,000 |
| The supplier receives | ₦4,900,000 |
The payee is a company, so the ₦100,000 goes to the Nigeria Revenue Service. Paid in October, it is due by 21 November.
Example 3: ₦2,400,000 rent to a landlord in Rivers
| Line | Amount |
|---|---|
| Payment | ₦2,400,000 |
| WHT at 10% (rent) | − ₦240,000 |
| The landlord receives | ₦2,160,000 |
The landlord is a person living in Rivers, so the ₦240,000 goes to the Rivers State Internal Revenue Service. Paid in October, it is due by 30 November.
Let Sawa do this on every payment
Sawa pays your contractors and staff, takes WHT and PAYE as it goes, and shows what you owe each tax office and when. See how Sawa runs payroll, book a demo or ask for a spot.
Questions people ask
What are the WHT rates in Nigeria?
For a payee resident in Nigeria: contracts & services (general) 2%, professional / consultancy fees 5%, construction services 2%, supply of goods 2%, rent 10%, dividends 10%, interest 10%, royalties 10%, directors' fees 15%, commissions 5%.
Is the WHT rate different for a person and a company?
No. The rate depends on the type of work and where the payee is resident. Whether the payee is a person or a company changes where the tax goes: a person living in Nigeria to their state's revenue service, a company to the Nigeria Revenue Service.
Who do I pay withholding tax to?
For a person who lives in Nigeria, the revenue service of their state. For a company, or a person who does not live in Nigeria, the Nigeria Revenue Service.
When is WHT due?
Counted from the month the contractor is paid: by the 21st of the next month to the Nigeria Revenue Service, or by the last day of the next month to a state revenue service.
Does Sawa apply the small-business WHT exemption?
No. Sawa takes WHT in full on every contractor payment.
What if an invoice covers different kinds of work?
Each line is taxed at the rate for its own type of work. A payment with no type recorded is treated as general contracts and services, at 2%.
What about a payee outside Nigeria?
A separate table applies, and the calculator shows it. Sawa's payroll does not apply that table yet.
Do staff on payroll pay WHT?
No. Staff on payroll pay PAYE, worked out on their salary. WHT is for payments to contractors, consultants, suppliers and landlords.