AN EXAMINATION OF THE ADMINISTRATION OF WITHOLDING TAX IN NIGERIA

Abstract

Tax is a levy imposed and administered by the different tiers of government in Nigeria. There are several methods of tax administration in Nigeria one of which is the Withholding tax system. Withholding tax is not another type of tax but the deduction of tax at source from payment made in certain transactions to a taxable person from the supply of goods or services. Withholding Tax (WHT) is one of the most effective tools for curbing tax evasion and ensuring early collection of revenue in Nigeria. The Withholding Tax system is a veritable source of revenue to government. It enhances the collection efforts of tax authorities and it is an advanced method of income tax payment. The enactment of the Nigeria Tax Administration Act, 2025, Nigeria Tax Act, 2025 and Deduction of Tax at Source (Withholding) Regulations 2024 represents a significant reform aimed at harmonizing tax administration, enhancing compliance, and strengthening the country’s fiscal system. This paper examines the administration of withholding tax under the New Tax Reform Acts and the Deduction of Tax at Source (Withholding) Regulations 2024, highlighting its legal framework, institutional arrangements, and procedures for deduction and remittance. To this end this research examined the legal regime for the administration of withholding tax in Nigeria. The study adopted doctrinal method of legal research which includes both primary and secondary sources of data. The primary data includes: statutes and case laws while the secondary data includes: legal textbooks, online articles, journals among others. The study found that withholding tax was introduced to curb tax evasion by allowing payment to be deducted at source and remitted to the appropriate tax authority - Federal or State Board of Internal Revenue within 21 days after the end of the month the transaction was made. It further analysed the major challenges hindering efficient administration, including non-remittance, overlapping jurisdiction between Federal and State authorities, limited automation, and poor taxpayer awareness. The study concluded that although the 2025 Act has introduced progressive measures such as digital remittance, unified taxpayer identification, and stricter penalties, effective implementation depends on robust institutional capacity, inter-agency coordination, and sustained taxpayer education.