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Withholding tax: what it is and who actually pays it

3 min read

If you invoice clients for professional services, rent, or contract work, some of what you're owed may never reach you directly — it's withheld and remitted on your behalf instead.

What gets withheld, and at what rate

Yes. Under the Deduction of Tax at Source (Withholding) Regulations 2024, a client should withhold 5% on professional/consultancy fees or technical services, 10% on rent, and 2% on general contracts or goods supply. This withholding tax (WHT) isn't extra tax — it's a credit against what you owe when you file your annual return.

It's not an extra cost

No — it's a credit against what you owe when you file your annual return, not an additional tax.

Who actually withholds it

The paying party withholds the tax before paying you and remits it on your behalf — enter either the invoice amount before withholding (gross) or the amount you want to receive after withholding (net) and TaxLane solves for the other.

Put this into practice

Work out WHT on a real invoice — gross-to-net or net-to-gross — with TaxLane's WHT calculator.

Frequently asked questions

Is withholding tax an extra cost on top of what I owe?

No — it's a credit against what you owe when you file your annual return, not an additional tax.

Who actually withholds the tax — me or my client?

The paying party withholds the tax before paying you and remits it on your behalf — enter either the invoice amount before withholding (gross) or the amount you want to receive after withholding (net) and TaxLane solves for the other.

Does tax get deducted from my invoices before I get paid?

Yes. Under the Deduction of Tax at Source (Withholding) Regulations 2024, a client should withhold 5% on professional/consultancy fees or technical services, 10% on rent, and 2% on general contracts or goods supply. This withholding tax (WHT) isn't extra tax — it's a credit against what you owe when you file your annual return.

Is this official tax advice?

No — for guidance only, not tax advice.