Welcome To NaijaAccountWiz

Dissecting Accounting Issues One At A Time!

  • Home
  • About Us
  • Courses
    • Cost Accounting
    • Financial Accounting
    • Financial Reporting
    • Governance and Ethics
    • Past Questions and Answers
    • Performance Management
    • Public Sector Accounting
    • Management Accounting
  • Past Questions
    • Category
      • Sub Category
      • Sub Category
      • Sub Category
    • Category
    • Category
    • Category
  • Facebook
  • Contacts
  • Home
  • Privacy Policy
  • Disclaimer

Wednesday, September 09, 2015

Withholding Tax and The Nigerian Rates

 11:48:00     No comments   





What is a Withholding Tax?
A withholding tax is basically an advance and  indirect source of taxation deducted at source from the invoices of the tax payer. It’s main purpose is to capture as much tax payers that may have evaded tax into the tax net. Withholding tax rates are usually 10% or 5% depending on the type of transaction and collecting authority for the tax (which can be a Federal Inland Revenue or the State Inland Revenue).

In Nigeria, the withholding tax is deducted at source by the authorized withholding tax agent and the tax is later paid to the State Internal Revenue if the recipient of the income from which the tax is deducted is an individual. The amount withheld is paid to the Federal Inland Revenue Service Board, if the recipient of the income is a corporate body. Suffice it to say, that in determining the relevant tax authority on withholding tax, the residence of the recipient is very important. For example, the residence of the landlord is important in determining the relevant tax authority on withholding tax on rent. In case of the interest, the location of the branch of the bank paying the interest is relevant. The residence of the tax payer is important when considering the issue of royalty. However, the residence of the taxpayer is important and not the location of the company paying the dividend. In the case of director's fees, the residence of the recipient director is an important consideration. Withholding tax is an advance payment of tax, which was introduced in 1985 in Nigeria to bring into the tax net all the taxpayers including those not registered or too difficult to track down.
WITHHOLDING TAX RATES IN NIGERIA
S/N
Nature of Transactions or Payments
Companies
Individuals
1.
Contract of construction
5%
5%
2.
Contract of supplies, agency etc.
5%
5%
3.
Dividend, Rent & internet
10%
10%
4.
Technical fees
10%
5%
5.
Royalties
10%
5%
6.
Professional Services
10%
5%
7.
Management Services
10%
5%
8.
Directors‟ fees
-
10%
9.
Hire of equipment, Plant & Machinery and Motor Vehicles
10%
10%
10.
Rents
10%
10%
11.
Interests
10%
10

  • Share This:  
  •  Facebook
  •  Twitter
  •  Google+
  •  Stumble
  •  Digg
Email ThisBlogThis!Share to TwitterShare to Facebook
Newer Post Older Post Home

0 comments:

Post a Comment

Popular Posts

  • STORES AND STORES ACCOUNTING
       The Federal Government Financial Instruction 3101 defines stores as “All moveable items purchased from public fund or otherwise acqu...
  • Departmental Vote Expenditure Analysis Book
    A vote book is a book of account controlled by an officer of a government used for monitoring expenditure government expenditure an...
  • Difference Between Audit Engagement Letter and Management Letter of Representation
    Audit Engagement Letter An Engagement letter is a legal contract between the External Auditor and his client. The main purpose of this l...
  • Rules and Principles Based Approach of Corporate Governance
    Corporate governance is all about monitoring and controlling management decisions and strategies all to the best interest of ...

Related Posts

Powered by Blogger.
  • Cost Accounting
  • Financial Accounting
  • Financial Reporting
  • Governance and Ethics
  • Management
  • Past Question and Answer
  • Performance Management
  • public Sector Accounting

About Me

My photo
Nma
View my complete profile

Subscribe To

Posts
Atom
Posts
Comments
Atom
Comments

Followers

Blog Archive

Blogger Tips and TricksLatest Tips For BloggersBlogger Tricks

Copyright © Welcome To NaijaAccountWiz | Powered by Blogger
Design by Hardeep Asrani | Blogger Theme by NewBloggerThemes.com | Distributed By Gooyaabi Templates