Yes. It is another form of tax but simply an advance payment of tax, as the tax deducted at source can be set-off against any subsequent tax liability payable on such income by the recipient (tax payer).

Yes. You are a collecting agent of government. Whenever you or your firm pays an individual or corporate entity any of the under listed items, appropriate withholding tax must be deducted and remitted to the relevant tax authority (State Internal Revenue Service or Federal Inland Revenue Service).

Withholding Taxes must be deducted from payments due to corporate bodies and individuals on Rent, Commission, Management/Professional Fees, Consultancy Fees, Technical Service, Dividend, Directors’ Fees, Agency Arrangements/Agreements, Tenancy Agreement Dividend, Supplies.

The currency in which tax is to be deducted and paid over to the relevant Tax Authorities is the currency of transaction. Where the transaction is in foreign currency, tax is to be deducted in the foreign currency and remitted to the Relevant Tax Authority which could be paid in local currency at the instance of the Revenue Authority.

Taxes withheld from payments due to corporate bodies and individuals must be remitted to the relevant authorities on the earlier of 30 days for individuals and 21 days for corporate entities from the date the amount was deducted and from the time the duty to deduct arose.

Yes. A person or body corporate who fails to deduct or having deducted fails to remit such deductions within 30 days shall be liable to a penalty of an amount of 10% of the tax not deducted or not remitted in addition to the amount of tax not deducted or remitted plus interest at the prevailing monetary rate of the Central Bank of Nigeria.

The implication is that the income cannot be subjected to further taxes in the hands of the recipients apart from the withholding taxes earlier deducted.

Withholding tax on dividend, interest, rent and royalties when suffered by individuals or corporate entities not resident in Nigeria represent final tax.

Also, with effect from January 1996, withholding tax on interest and dividend represent final tax on these incomes in the hands individuals resident in Nigeria.

Withholding tax is paid to the relevant authority depending on whether the taxpayer is a corporate body or an individual. VAT on the other hand, can only be paid to the Federal Inland Revenue service under the Nigerian Tax Laws.

VAT is a form of indirect tax (consumption) while withholding tax is a direct tax (income)

Withholding tax is deducted from income while VAT is added to the invoiced value of goods and services.

The individual who suffered withholding tax has the right to set it off against future tax liability, VAT cannot be set-off.

• You must ensure that the individual or corporate entity (collecting agent) to whom you render services remit the withholding taxes deducted from your income to government coffers and obtain certificate of payment issued by AKIRS in your name.
• The certificate of payment should be included in your tax return for the relevant year
• Once your income from all sources have been assessed and tax due ascertained the amount of withholding tax paid at source will be set-off against the tax due to arrive at net tax payable.
• It is important to emphasize that the presentation of a letter from the collection agent showing that a taxpayer has suffered deduction is not enough for AKIRS to grant withholding tax credit
• Similarly, government treasury receipts issued by other government departments showing that they have deducted tax from a taxpayer are not enough to grant tax credit.