Under the latest Tax regulations, if you are a Small Company (turnover ≤ ₦100m), you are generally exempt from having WHT deducted from your payments by your clients, provided you have a valid TIN and the transaction is ₦2m or less.
If you have a Small Company, the burden of proof is on you to show that you qualify for an exemption. Since "Small Company" status is determined by your annual performance, a client cannot know your status just by looking at your name or RC number.
To prevent a client from deducting Withholding Tax (WHT), you should provide a "Small Company Status Pack" when submitting your invoice or contract.
How to Prove Your Small Company Status
1. The Self-Certification Letter
The most common way is to issue a formal Self-Certification on your company letterhead. In this letter, you formally declare that:
- Your projected (or previous year's) annual gross turnover is ₦50 million or less.
- Your total fixed assets do not exceed ₦250 million.
- You possess a valid Tax Identification Number (TIN) (which must be quoted).
- Note: Under the 2024/2025 WHT Regulations, if your transaction is ₦2 million or less and you have a TIN, small businesses are explicitly exempt from WHT.
For large contracts, a client’s compliance department may ask for your latest financial accounts. This proves that your "gross inflow" (Turnover) actually falls within the small company bracket.
Summary Checklist for Your Client
When you go to make that supply, give the client these three things to ensure you get your full payment:
- A valid Invoice clearly displaying your TIN.
- A copy of your current TCC (or proof of recent filing).
- A Self-declaration letter citing the Deduction of Tax at Source (Withholding) Regulations 2024 and the Nigeria Tax Act 2025 exemptions for small companies.
Warning: If you do not provide a valid TIN, the client is legally mandated to deduct WHT at double the rate (e.g., 4% instead of 2% for supplies), regardless of your company size.