What is the deadline for remitting withholding tax and the penalties?
The Timeline for remitting the deducted tax to the NRS is by the 21st day of the following month.
Under the Nigeria Tax Administration Act 2025 and the Deduction of Tax at Source (Withholding) Regulations 2024 (now effective in 2026), the rules and penalties have been sharpened to enforce digital compliance.
1. The Penalty for Failure to Deduct (The "40% Rule")
Under the new 2025 Act, there is a specific, heavy penalty for failing to withhold tax in the first place:
- The Penalty: If you were supposed to deduct WHT (e.g., on a ₦50m supply) but you paid the vendor in full instead, you are liable for a penalty of 40% of the amount you failed to deduct.
- The Logic: This is designed to be painful enough that businesses cannot "look the other way" for their favorite suppliers.
2. The Penalty for Failure to Remit (Deducted but not Paid)
If you did deduct the money from the consultant but kept it in your account instead of paying it to the Nigeria Revenue Service (NRS) by the 21st of the following month:
- The Principal: You must pay the original tax amount.
- Administrative Penalty: 10% per annum of the unremitted tax.
- Interest: Charged at the CBN Monetary Policy Rate (MPR). (In 2026, with MPR being high, this interest accumulates very quickly).
- Criminal Liability: For companies, this can lead to a fine equal to the tax plus an additional 50% penalty, and for directors, up to 3 years imprisonment.
3. Failure to File Returns (The Paperwork Penalty)
Even if you paid the tax but failed to file the "return" (the schedule showing who you paid), you are hit with fixed administrative fines:
- First Month: ₦100,000.
- Subsequent Months: ₦50,000 for every month the failure continues.
Summary of SME Tax Status (2026 Verified)
To ensure you have the correct "Small Company" figures for your business, here are the final 2026 thresholds:
| Feature | Small Company (Verified 2026) | Standard/Large Company |
|---|---|---|
| Turnover Limit | ₦50 Million or less | Above ₦50 Million |
| CIT Rate | 0% | 30% (Gradually reducing) |
| Development Levy | Exempt | 4% of Profit |
| WHT on Receipts | Exempt (if < ₦2m & has TIN) | Always liable (2% to 5%) |
Important Note on "Professional Services"
There is a specific "catch" in the 2025 Act: Professional service providers (consultants, lawyers, accountants) are often excluded from the 0% small company rate regardless of their turnover. If you are a consultant making ₦10m a year, the NRS may still expect you to pay the standard CIT rate because of the nature of your business.