To calculate Withholding Tax (WHT) on consultant fees in Nigeria, you must first identify if the consultant is a Resident or Non-Resident. Under the Deduction of Tax at Source (Withholding) Regulations 2024 (effective 2025/2026).
1. The Applicable Rates
The rate for consultancy, professional, management, and technical fees depends on who is receiving the payment:
| Recipient Type | New WHT Rate (2025/2026) | Old Rate (Pre-2024) |
|---|---|---|
| Resident Company | 5% | 10% |
| Resident Individual | 5% | 5% |
| Non-Resident (Company or Individual) | 10% | 10% |
Crucial Warning: If the consultant does not have a valid Tax Identification Number (TIN), you are legally required to double the rate. A resident company without a TIN would be taxed at 10% instead of 5%.
2. How to Calculate (The Formula)
The calculation is always based on the Gross Amount on the invoice, before any other deductions.
WHT Amount = Gross Fee x Applicable Rate
Example: ₦10,000,000 Consultancy Fee (Resident Company)
- Gross Amount: ₦10,000,000
- Rate: 5% (assuming they have a TIN)
- Calculation: ₦10,000,000 x 0.05 = ₦500,000
- Net Payment to Consultant: ₦9,500,000
- Remittance: You must pay the ₦500,000 to the Nigeria Revenue Service (NRS) and provide the consultant with a WHT Credit Note.
3. Key Rules to Remember
- Final Tax for Non-Residents: For non-resident consultants, this 10% is usually the final tax. They do not need to file further income tax returns in Nigeria on that income.
- Small Company Exemption: If the consultant is a Small Company (Turnover ₦50m), they are exempt from WHT only if the transaction is ₦2 million or less in that month. For a ₦10m fee, you must still deduct the 5% regardless of their size.
Reimbursable Expenses: If the consultant’s invoice includes "out-of-pocket" expenses (like flight tickets or hotel receipts attached as proof), you do not deduct WHT on the reimbursed costs—only on the actual professional fee.