A Guide To The Operation of Withholding Taxes (WHT)

  1. INTRODUCTION

Withholding Tax was introduced into the Nigerian Tax system as a means of improving efficiency in Tax collection. Withholding Tax refers to an advance payment applied as Tax credit to settle income tax liability of the year to which the income suffered deduction/rates. The deductions are made at source from Dividend, Contact, Rent, Director’s fees, commission, etc. Withholding Tax was originally introduced through the provision of section 21c to Section 21f of ITMA 1961. Now Person income Tax Act 104, 1993 as amended,.

  1. WHAT IS WITHHOLDING TAX?

Withholding Tax is the Tax deducted from rent due to landlord, Dividends due to shareholders, Director’s Fees due to non executive directors of companies, Contract payment due to contractors, etc paid over to the Internal Revenue office as a deposit for the purpose of reducing the amount of Tax which the landlord or the shareholders or non-executive director of companies would be called upon to pay when assessment is completed.

  1. ADMINISTRATION OF WITHHOLDING TAX

When any amount becomes payable in respect of any withholding taxes from Rent, Contact, Dividend, Director’s fees etc The payer of such amount shall at the date when the amount of the beneficiary is credited (Whichever first occurs) deduct there from the withholding tax at the applicable rate.

The withholding tax deducted must be paid to the relevant Tax Authority’s designated bank accounts within thirty (30) days from date when the amount become payable. The net amount shall be paid to the recipient while the withholding tax memorandum receipt obtain from the tax authority would be forwarded to him

  1. PERSON LIABLE TO DEDUCT WITHHOLDING TAX

The payer of withholding tax in respect of any of the activities covered under the withholding tax regime shall include company (Corporate or non-corporate), Government Ministries and Department, Parastatals, Statutory bodies, Institutions and other established organization approved for the operations of Pay As you Earn System.

  1. APPLICATION RATE WITHHOLDING TAX IN NIGERIA

 

Type of payment service

Withholding Tax Rate applicable to individuals and non limited liability companies (payable to Kaduna state Board of Internal Revenue

Withholding Tax Rate applicable to limited liability companies (payable to federal Inland Revenue Service

I

Dividends, Bank interest and rent

10%

10%

II

Royalties

15%

15%

III

Commissions

10%

10%

IV

Director’s fees

10%

10%

V

Consultancy technical Services and Management Fees

10%

5%

VI

Building Construction and Related services

5%

5%

VII

Contract/Supplies

5%

5%

VIII

Vat

5%(FIRS)

5%(FIRS)

What differentiate between limited liability and non-limited liability is determined by the registration of the Corporation Affairs Commission. Limited Liability Companies deductions should be paid to the FIRS, while individuals/Ventures/Enterprises be paid to KDBIR.

  1. RELEVENT TAX AUTHORITY

The withholding tax on Rent, Divided, and Contract etc shall be paid to the State Internal Revenue of the principal place of resistance of the recipient. For example , if the owner of a property situated in Lagos has his principal place of residence in Kaduna State, the withholding tax on the rent due from him would be paid to the Kaduna State Board on Internal Revenue. 

  1. RETURN’S OF WITHHOLDING TAX

The returns of withholding tax deducted  must be made to the relevant Tax Authority within thirty (30) days from such deductions.

The withholding tax returns to the relevant tax authority must be made  with the following information:

  1. Names and addresses of the sufferer of the withholding information tax:
  2. Gross amount of payment.
  3. Amount of the tax withheld
  4. Period Covered.
  5. Type of service rendered
  1. VAT AND  WITHHOLDING TAX

VAT is not a substitute for withholding tax. A vat able service may still be liable to the deduction of withholding tax. VAT is a tax on consumption while withholding tax. VAT is a tax on consumption while withholding tax is an advance payment of tax which the sufferer is entitled to deduct from his/her actual tax liability.

  1. OFFENCES AND PENALTIES OF WITHHOLDING

Any person or body, corporate, who is being obliged to deduct tax under the provision of the Personal income Tax Act 104 of 1993, fails to deduct or Board within Thirty (30) days from the date amount was deducted or the duty to deduct arose, shall be guilty of an offence and shall be liable on conviction of fine of 200% of the tax withheld or not remitted as the case may be.

               LIST OF AREA REVENUE OFFICES AND THEIR ADDRESSES

 

OFFICE

LOCATION

1.

Kakuri east

No1 Kachia Road Opp, Railway Station Kaduna

2.

Kakuri west

Inuwa Abdulkadir Road Opp. Finetex, Kakuri Kaduna

3.

Kawo

Ali Akilu RD.,Opp. Ap Filling Station, Kaduna

4.

Doka west

CC8 Ibrahim Taiwo Road/Abeokuta Street Kaduna

5.

Doka East

Alimi road former water board H/Qtr

6.

T/wada

L1 Poly, T/Wada, Kaduna

7.

Makarfi

Opp. Makarfi L.G Secretariat

8.

Ikara

Ikara L.G Secretariat

9.

Saminaka

Jos Road, Saminaka

10.

Kafanchan

Old Sub-Treasury Opp. Kaf. Stadium

11.

Kachia

Opp. Police Station, Kachia

12

Jere

Off Kaduna-Abuja Road, jere

13.

B/Gwari

B/gwari L.G Secretariat

14.

Zaria

GRA Sabon Gari Queen Elizabeth Rd

15.

Samaru

Opp. ABU Main Gate Samaru

16.

Abuja

Arcade Hotel, Shehu Shagaari Avenue Abuja

17.

Lagos

Bishop Oluwa RD, Victoria Island Lagos

18.

Zonkwa

Z/Kataf LG Council Secretariat

19

Soba

Zaria- Jos Road, Soba

20.

Kwoi

Jaba LG Council Secretariat

21.

Giwa

Giwa LG Council Secretariat

22.

Turunku

Zaria Kaduna Road, Rigachikun

23.

Kawo Mini Tax Office

Kawo Motor Park

24.

Sabon Tasha mini Tax Office

Kachia Road Opp. P.H.C.N Office

             LIST OF COLLECTING BANKS           

S/NO

BANK CODE

BANK NAME

BANK BRANCH

BANK SORT CODE

ONLINE ACCOUNT NUMBER

1.

AFB

Afribank Nig. PLC

Bye pass, Kaduna

01411

0521371624619

2.

ABP

Access Bank Plc

Bida Rd, Kaduna

044110121

0120160000333

3.

FBN

First Bank of Nigeria PLC

Y/Gowan way Kaduna

01111950

9502040000189

4.

FIN

Finbank Plc

Ali Akilu Rd Kaduna

085112191

1219430000126101

5.

OBI

Oceanic Bank Intl PLC

KRPC Kaduna

056110038

1141301005094

6.

PHB

Platinum Habib Bank PLc

A/Bello Way, Kaduna

082110507

6010002034

7.

STANBIC

Stanbic/IBTC Plc

A/Bello Way, Kaduna

221110096

7200093470

8.

SKYE

Skye Bank Intl PLC

A/Bello Way, Kaduna

076111143

1141790000468

9.

SBP

Sterling Bank PLC

Ali Akilu Rd Kaduna

232110043

303605566110

10.

SPB

Spring Bank Plc

A/Bello Way, Kaduna

084110482

048203930003501

11.

WEMA

Wema Bank PLc

A/Bello Way, Kaduna

035111045

1041053034917

12.

ZIB

Zenith Bank Intl PLC

Y/Gowon Way Kaduna

057110037

8170800005

13.

UBA

United Bank for Africa

T/Wada, Kaduna

033111539

03040050000017

14.

FBP

Fidelity Bank Plc

Y/Gowon Way Kaduna

070110328

032502010000270

15.

ECO

EcoBank PLC

Junction RD Kaduna

05011513

0690200190672801

16.

UNITY

Unity Bank Plc

Abubakar Gumi Mkt Kaduna

225

225/14010/1/42250

17.

ETB

Equit. Trust Bank PLC

A/Bello Way, Kaduna

040110358

0430032437618

18.

ICB

Intercontinental Bank Plc

Ali Akilu Rd Kaduna

069110203

0020101000000396

19.

FCMB

First city monument  Bank

1 Kachia Rd Kaduna

214110029

0891080512640001

20.

GTB

Guaranty Trust Bank PLC

Murtala Square Kaduna

058113114

311/10/1/4619/83

21.

UBN

Union Bank of Nigeria Plc

Magadishu Kaduna

032

0871110013470