A dividend leaving a Nigerian company has tax taken off first. The shareholder only gets what is left. The rate barely changes by who receives it. That makes it one of the simpler rates in the WHT system.
The rate, for everyone
Withholding tax on a dividend is 10%, under the Deduction of Tax at Source (Withholding) Regulations 2024. The same rate applies whether the shareholder is a Nigerian individual, a Nigerian company, or someone outside Nigeria entirely.
Interest payments are taxed the same way, at the same 10% rate, under the same rule.
Who actually deducts it
The company paying the dividend deducts the tax before payment. The shareholder does not do this. That is true whether they hold one share or a controlling stake.
Why it matters more for a non-resident shareholder
For a resident shareholder, the deduction is a payment on account. It is credited against tax owed for the year.
For a non-resident shareholder, it is the final tax. Nothing more is due once 10% is taken off. Keep each shareholder's resident status on file. It decides which rule applies.
Franked investment income, in plain terms
A Nigerian dividend that has already had WHT taken off gets a name in law: franked investment income. That applies once it reaches another Nigerian company.
This matters for a chain of companies. Picture a holding company paying a dividend up to its own shareholders. The profit is not taxed again at each step. The tax was already taken at the start.
A quick example
Take a company declaring a ₦5 million dividend, for example. It deducts 10% before payment. The shareholder gets the balance. The company remits the deducted amount separately.
Does the small-company exemption reach this
A small company is exempt from company income tax, capital gains tax and the development levy. Read more on that exemption.
Withholding tax on a dividend is a different charge. We could not confirm, from the facts available, that the small-company exemption reaches it too.
Treat WHT on a dividend as due either way, small company or not. Check with an adviser if your structure is unusual.
Common mistakes
- Paying the full dividend and deducting nothing. The 10% comes off before the shareholder is paid, not after.
- Taxing a non-resident shareholder again. The deduction is that shareholder's final Nigerian tax on the dividend.
- Assuming small-company status removes this deduction. The small-company exemption does not, on the facts we could confirm, cover WHT on dividends.
For the rate on other common SME payments, see WHT rates on contracts, services and goods. Deducted tax reaches the NRS by the 21st day of the following month each month, and you can browse the NRS and Rev360 hub for more.