Under the Nigeria Tax Administration Act (NTAA) 2025 and the Deduction of Tax at Source (Withholding) Regulations 2024, the process for managing "tax at source" (Withholding Tax or WHT) has been modernized to reduce the burden on small businesses while tightening enforcement for larger entities.
Here is the breakdown of how to handle returns and remittances in 2026.
1. What is "Deduction at Source"?
It is a system where the payer (person making the payment) is legally required to deduct a percentage of the transaction amount and remit it directly to the Nigeria Revenue Service (NRS) on behalf of the recipient.
The Receipt: Once you remit the tax, the NRS issue a credit note to the beneficiary, which they can use to reduce their final Company Income Tax (CIT) liability.
2. Filing Deadlines (The 2026 Rules)
The timing of your returns depends on the type of tax being deducted: Tax Type Filing & Remittance Deadline
PAYE (Personal Income Tax) Not later than the 10th day of the following month. Capital Gains Tax (CGT) Not later than the 10th day of the following month. Withholding Tax (WHT) Not later than the 30th day of the month following the payment.
3. Key Exemptions for Small Businesses
To reduce the "undue burden" mentioned earlier, the 2026 regulations include a minimis threshold :
The ₦2 Million Rule: Transactions of ₦2,000,000 or less in a calendar month are exempt from WHT, provided the supplier has a valid Tax Identification Number (TIN).
Small Company Status: If your business turnover is under ₦50M, you are largely exempt from many of these administrative obligations when dealing with other small businesses.
4. What Must the Return Contain?
When you file your WHT return through the NRS Taxpayer Self-Service Portal , the submission must include:
1. Beneficiary Details: Name, address, and TIN (or NIN for individuals).
2. Transaction Details: The nature of the service (e.g., consultancy, construction, or supply).
3. Financials: The gross amount of the invoice and the specific amount of tax deducted.
4. Proof of Payment: Evidence of remittance to the authorized bank or portal.
5. Penalties for Non-Compliance (The "Cost of Failure")
The 2026 regime is strict about "failing to act as an agent."
Failure to Deduct: You are liable for 40% of the amount you failed to deduct.
Failure to Remit: If you deducted the money but didn't pay it to the NRS, you must pay the Original Tax + 10% penalty + CBN Interest Rate .
General Filing Default: Failing to file the return attracts a fine of ₦100,000 for the first month and ₦50,000 for every month the default continues.
Pro-Tip for Administrative Compliance
If a supplier does not have a TIN, the law requires you to deduct tax at double the standard rate . This is a nudge from the government to ensure everyone is registered in the tax net. Always verify a vendor's TIN on the NRS portal before making a payment to avoid being held liable for the difference.