Withholding Tax on Invoices Nigeria: 2026 Guide
Withholding tax, often called WHT, is one of the reasons a customer may pay less than the amount shown on your invoice. It is not the same as VAT and it is not automatically a discount on your work.
The customer deducts WHT at source in circumstances required by the relevant tax rules, then remits it to the appropriate tax authority. The correct treatment depends on the service, the parties and the applicable rules, so use this as a practical record-keeping guide rather than a rate sheet for every transaction. Check the current NRS withholding tax guidance or obtain professional advice for a specific contract.
VAT and WHT are different
VAT is a tax charged on taxable supplies by a supplier who must account for it. WHT is a deduction made by the payer in relevant cases. You can have an invoice where neither applies, one where VAT applies, or one where a customer deducts WHT. Do not label a WHT deduction as “VAT deducted”.
A simple example
Assume you invoice a client ₦500,000 for consulting. The client tells you it will deduct WHT of ₦25,000 under the treatment that applies to the engagement.
| Item | Amount |
|---|---|
| Consulting fee invoiced | ₦500,000 |
| WHT deducted by client | -₦25,000 |
| Cash paid to supplier | ₦475,000 |
The invoice should still accurately show the service fee. Keep the deduction advice, payment confirmation and tax credit evidence together. Do not issue a new invoice for ₦475,000 unless that is genuinely the agreed price before WHT.
What to ask the client for
When WHT is deducted, ask for a clear deduction schedule or evidence showing the payer, your name, the invoice reference, date, amount deducted and remittance details. This is especially important for freelancers and contractors who work with large companies.
If the payment arrives short without an explanation, ask before treating it as a deduction. It may be a bank charge, an unauthorised adjustment or a partial payment. Our partial payment guide can help you record the outstanding balance correctly.
How to prepare the invoice
Use a detailed description, unique invoice number and agreed payment terms. State the gross fee, VAT where lawfully applicable, and total due. Do not guess a WHT rate in the invoice unless the contract and advice from the customer or adviser make the position clear.
For ongoing services, retain a simple ledger showing invoice number, gross amount, payment received, deductions claimed and supporting documents. It will make year-end accounts and tax discussions much easier.
Use an invoice that is easy to reconcile
Create invoices with a clear amount and reference using InvoiceGenerator.ng. Check any VAT calculation before you send it with the Nigeria VAT calculator, then follow up professionally using our payment reminder templates.
Frequently asked questions
Is withholding tax an extra charge to my customer?
No. It is generally deducted from a payment under the relevant tax rules. The customer should explain any deduction and provide appropriate evidence.
Should I change the invoice total after WHT is deducted?
Normally, retain the original invoice and record the payment and deduction separately. This keeps the commercial value of the work clear.
Can I ignore a small unexplained deduction?
No. Ask for an explanation and keep the supporting record. Small unexplained differences create problems when many invoices are reconciled later.