WHT on Dividends in Nigeria: Rates, Exemptions & How to Deduct

How withholding tax on dividends works in Nigeria under the NTA 2025. The 10% rate, exemptions for small companies and government securities, treaty rates, and deduction process.

When a Nigerian company declares a dividend, it does not simply pay the full amount to its shareholders. It deducts 10% withholding tax, pays the net to the shareholders, and remits the 10% to the NRS. This happens on every dividend — interim, final, and special — regardless of whether the shareholder is an individual, a company, a Nigerian resident, or a foreign investor.

The paying company is the withholding agent, and the obligation to deduct, remit, and account for the WHT falls squarely on it. Getting this wrong — deducting the wrong rate, missing an exemption, failing to remit on time, or not issuing credit notes — exposes the company to penalties that dwarf the administrative effort of getting it right.

This guide covers the full mechanics of dividend WHT in Nigeria: who deducts, at what rate, from whom, when the exemptions apply, how Double Taxation Agreements change the rate, and how to handle every step from board declaration to NRS remittance.

How Dividend WHT Works

The mechanics are straightforward. When a company’s board declares a dividend — say ₦5 per share — the company computes the total dividend payable to each shareholder, deducts 10% WHT from each shareholder’s entitlement, pays the net (₦4.50 per share) to the shareholder, and remits the total WHT to the NRS.

The Sequence

1. Board declares the dividend. The board of directors approves a dividend — interim (during the financial year) or final (after year-end, subject to shareholder approval at the AGM). The declaration specifies the amount per share, the record date (who qualifies), and the payment date.
2. Company computes each shareholder’s entitlement. For a shareholder holding 100,000 shares at ₦5 per share, the gross dividend is ₦500,000.
3. Company deducts 10% WHT. WHT: ₦500,000 × 10% = ₦50,000. Net dividend payable to the shareholder: ₦450,000.
4. Company pays the net dividend. ₦450,000 is credited to the shareholder’s bank account or brokerage account.
5. Company remits the WHT to the NRS. The total WHT deducted from all shareholders is remitted to the NRS by the 21st of the month following the dividend payment.
6. Company issues WHT credit notes. Each shareholder receives a credit note confirming the WHT deduction — their name, TIN, gross dividend, WHT rate, WHT amount, and the NRS remittance reference.

For publicly listed companies on the Nigerian Exchange (NGX), the registrar (such as Africa Prudential, Cardinalstone Registrars, or Meristem Registrars) typically handles the computation, deduction, payment, and credit note issuance on behalf of the company. For private companies, the company’s finance team manages the process directly.

The 10% Standard Rate

The standard WHT rate on dividends paid by Nigerian companies is 10%, regardless of the recipient. This rate applies to:

• Individual shareholders — Nigerian residents receiving dividends from any Nigerian company
• Corporate shareholders — Nigerian companies receiving dividends from other Nigerian companies
• Non-resident shareholders — foreign individuals and companies receiving dividends from Nigerian companies (subject to DTA modifications, discussed below)

The 10% is applied to the gross dividend amount — the full amount declared before any deduction. If the dividend is ₦10 per share, WHT is ₦1 per share, and the shareholder receives ₦9 per share. The paying company remits the ₦1 per share to the NRS.

Is Dividend WHT a Final Tax?

For most recipients, yes. The 10% WHT on dividends is treated as a final tax — the shareholder has no further income tax obligation on the dividend income.

For Individual Shareholders

The 10% WHT is the final tax. An individual receiving ₦500,000 in gross dividends pays ₦50,000 in WHT (deducted at source) and keeps ₦450,000. They do not include the dividend in their annual PIT return or pay additional income tax on it. The WHT settles the obligation completely.

This makes dividend WHT one of the simplest taxes to comply with from the shareholder’s perspective — the company handles everything, and the shareholder receives their net amount with no further action required.

For Nigerian Corporate Shareholders

Dividends received by a Nigerian company from another Nigerian company are generally treated as franked investment income — income that has already borne tax at the corporate level (through CIT paid by the paying company) and at the distribution level (through WHT). The receiving company includes the dividend in its income but claims the WHT as a credit against its own CIT liability.

In practice, for most holding company structures within Nigeria, the 10% WHT is effectively the final cost on the dividend flow between group companies. The receiving company may use the WHT credit to offset its own tax, but the dividend income itself does not attract additional CIT beyond what the WHT already represents.

For Non-Resident Shareholders

For foreign shareholders, the 10% WHT is also generally the final Nigerian tax on the dividend. Nigeria’s right to tax the dividend is exercised through the WHT at source — the non-resident does not file a Nigerian return or pay additional Nigerian tax on the dividend. However, the rate may be reduced under a DTA (see below), and the non-resident may claim a credit for the Nigerian WHT against their home country tax.

When the 10% Rate Does Not Apply

Exemption: Small Company Dividends

Under the NTA 2025, companies that qualify as small companies — turnover of ₦50,000,000 or below, gross assets of ₦250,000,000 or below, and not providing professional services — enjoy 0% CIT. The interaction between the 0% CIT rate and dividend WHT is an area companies should monitor closely. While the paying company may not owe CIT, the dividend it distributes to shareholders is still subject to 10% WHT under the standard rules. The WHT obligation applies to the distribution, not to the company’s CIT status.

Exemption: Government Securities

Distributions from investments in Federal Government of Nigeria securities — FGN Bonds, Treasury Bills, FGN Sukuk, FGN Savings Bonds — are exempt from WHT. This exemption applies to the interest or discount income on these instruments, not to dividends per se (government securities do not pay dividends — they pay interest or mature at a premium). However, the exemption is relevant for unit trusts and mutual funds that hold government securities: the portion of a fund’s distribution that derives from government security income retains the exemption and should not attract WHT.

Exemption: Real Estate Investment Trusts (REITs)

Distributions from REITs that have been approved by the Securities and Exchange Commission (SEC) and that distribute at least 90% of their taxable income may qualify for WHT exemptions or reduced rates under specific incentive provisions. The treatment depends on the REIT’s structure and regulatory approvals — consult the fund’s tax disclosure or a tax professional for the specific position.

Exemption: Dividend Between Certain Related Companies

In some holding company structures, dividends paid between Nigerian companies within the same group may benefit from specific provisions that prevent cascading taxation. The NTA 2025’s franked investment income rules are designed to mitigate this — but the mechanics depend on the specific ownership percentages, the nature of the paying and receiving entities, and whether specific exemption conditions are met. Companies in multi-tier holding structures should obtain specific advice on the WHT treatment of inter-company dividends.

Double Taxation Agreement Rates

When a Nigerian company pays dividends to a shareholder resident in a country with which Nigeria has a Double Taxation Agreement, the DTA may reduce the WHT rate below the standard 10%. The reduced rate applies only if the non-resident shareholder qualifies under the DTA and provides the paying company with evidence of their treaty residence.

Common DTA Dividend WHT Rates

Portfolio dividends are dividends paid to shareholders who hold less than the substantial holding threshold. Substantial holding dividends are dividends paid to shareholders who hold the threshold percentage or more — the reduced rate rewards significant investment.

Note that Canada’s DTA rate of 12.5%–15% exceeds Nigeria’s domestic rate of 10%. In this case, the domestic rate applies — a DTA cannot increase the rate beyond what domestic law provides. The lower of the DTA rate and the domestic rate always applies.

How to Apply a Treaty Rate

The paying company applies the treaty rate instead of the standard 10% only if:

1. The non-resident shareholder provides a valid Certificate of Tax Residence from their home country’s tax authority, confirming they are a tax resident of the treaty country
2. The shareholder qualifies for the treaty benefit — they are the beneficial owner of the dividend (not an intermediary or conduit), and the conditions of the specific DTA article on dividends are met
3. The paying company is satisfied that the treaty applies and documents its basis for applying the reduced rate

If the paying company is unsure whether the treaty rate applies, the safest approach is to deduct at the standard 10% and allow the non-resident shareholder to apply for a refund of the excess through their home country’s tax authority under the DTA’s Mutual Agreement Procedure — or to seek a ruling from the NRS before the dividend is paid.

Countries Without a DTA

Nigeria does not have a DTA with many major investment source countries, including the United States. Dividends paid to US shareholders are subject to the full 10% Nigerian WHT with no treaty reduction. The US shareholder may claim a foreign tax credit for the 10% Nigerian WHT against their US tax liability — but the Nigerian rate is not reduced.

The Paying Company’s Obligations

As the withholding agent, the paying company has five obligations when distributing dividends:

1. Deduct WHT at the Correct Rate

Apply 10% (or the applicable treaty rate) to each shareholder’s gross dividend. If shareholders include both Nigerian residents (10%) and non-residents from treaty countries (potentially 7.5%), each shareholder’s WHT must be computed at the rate applicable to them. A blanket 10% deduction from all shareholders is incorrect if some qualify for a reduced treaty rate — though as noted, applying 10% and allowing treaty refunds is the conservative approach when treaty entitlement is uncertain.

2. Remit WHT to the NRS by the 21st

The total WHT deducted from all shareholders must be remitted to the NRS by the 21st of the month following the dividend payment date. If the dividend is paid on 15 March, the WHT remittance is due by 21 April. Use the NRS Self-Service Portal at selfservice.nrs.gov.ng or the designated payment channels (Remita, approved banks) to make the remittance. Reference your company’s TIN, the tax type (WHT on dividends), and the payment period.

3. Issue WHT Credit Notes to All Shareholders

Every shareholder from whom WHT was deducted is entitled to a credit note. The credit note must include the paying company’s name and TIN, the shareholder’s name and TIN, the gross dividend, the WHT rate, the WHT amount, the payment date, and the NRS remittance reference. For listed companies, the registrar typically issues credit notes on behalf of the company — but the obligation remains with the company.

For private companies with a small number of shareholders, the finance team can issue credit notes directly. Use a consistent format and number each credit note sequentially for your records.

4. File the WHT Return

The paying company files a WHT return with the NRS for the period in which the dividend was paid, declaring the total gross dividends, the total WHT deducted, and the details of each shareholder (name, TIN, gross dividend, WHT). This return accompanies the remittance and forms part of the company’s compliance record.

5. Maintain Records for Six Years

Keep records of the board resolution declaring the dividend, the shareholder register as at the record date, the computation of each shareholder’s entitlement and WHT, the remittance receipt, copies of all credit notes issued, and the WHT return filed. Retain for a minimum of six years under the NTAA 2025.

Worked Example: Private Company Dividend Distribution

Greenfield Ventures Ltd has three shareholders. The board declares a final dividend of ₦20,000,000 for the 2026 financial year.

Greenfield’s obligations:

• Pay ₦9,000,000 to Ade, ₦5,400,000 to BrightPath, and ₦3,700,000 to Thornton Capital
• Remit ₦1,900,000 to the NRS by the 21st of the following month
• Issue WHT credit notes to all three shareholders — Ade (₦1,000,000 at 10%), BrightPath (₦600,000 at 10%), and Thornton Capital (₦300,000 at 7.5%)
• File a WHT return with the NRS declaring the ₦20,000,000 gross distribution and ₦1,900,000 WHT
• Retain documentation of Thornton Capital’s UK tax residence certificate and the basis for applying the 7.5% treaty rate

Note: Thornton Capital holds 20% of Greenfield’s shares — above the 10% voting rights threshold in the Nigeria-UK DTA. This qualifies Thornton for the reduced 7.5% rate instead of the standard 10%. Without the treaty, Thornton would pay ₦400,000 in WHT instead of ₦300,000 — the treaty saves ₦100,000 on a single distribution.

Worked Example: Listed Company Dividend

Apex Cement Plc is listed on the NGX. It declares a final dividend of ₦3.50 per share. The company has 2,000,000,000 shares outstanding. Total gross dividend: ₦7,000,000,000.

The registrar processes the dividend:

• Computes each shareholder’s entitlement based on the share register as at the record date
• Deducts 10% WHT from each shareholder’s gross dividend (treaty rates applied where non-resident shareholders have provided valid tax residence certificates)
• Pays net dividends to shareholders’ bank accounts or through stockbrokers
• Remits total WHT (approximately ₦700,000,000 before treaty adjustments) to the NRS
• Issues e-dividend statements (functioning as credit notes) to all shareholders showing gross dividend, WHT deducted, and net dividend received

For retail shareholders holding shares through a CSCS account, the dividend payment and WHT deduction are processed automatically. The shareholder sees the net credit in their bank account and receives a dividend statement from the registrar or their stockbroker. For most individual shareholders of listed companies, no further action is required — the 10% WHT is the final tax.

Penalties for the Paying Company

The penalties for failing to comply with dividend WHT obligations fall entirely on the paying company, not the shareholders:

The 40% penalty for failure to deduct is particularly severe. If a company distributes ₦50,000,000 in dividends without deducting WHT, the penalty is 40% of the ₦5,000,000 that should have been deducted — ₦2,000,000 — in addition to the ₦5,000,000 principal amount still owed to the NRS. The company bears the full cost because it cannot retrospectively deduct from shareholders who have already received their full dividends.

Dividend WHT and the Shareholder’s Tax Position

Individual Shareholders: No Further Action Required

For Nigerian-resident individual shareholders, the 10% WHT is the final tax on dividend income. The shareholder does not need to declare the dividend on their annual PIT return, does not need to pay additional tax, and does not need to collect a WHT credit note for PIT offset purposes. The tax is settled at source.

However, retaining dividend statements is good practice — they serve as evidence of income if your overall financial position is queried, and they document the WHT paid if any error or dispute arises.

Corporate Shareholders: Offset Against CIT

For Nigerian companies receiving dividends from other Nigerian companies, the dividend is franked investment income. The 10% WHT is a credit against the receiving company’s CIT liability. The company should collect the WHT credit note from the paying company and present it with its CIT return. If the company’s total WHT credits (from dividends and other sources) exceed its CIT liability, the excess carries forward.

Non-Resident Shareholders: Claim Credit in Home Country

Non-resident shareholders can typically claim a credit for the Nigerian WHT against their tax liability in their home country. The mechanism varies: in DTA countries, the treaty provides for the credit; in non-DTA countries, unilateral credit provisions in the home country’s tax law may apply. The Nigerian WHT credit note is the essential evidence for claiming the foreign tax credit.

Dividends Paid in Kind

Dividends are not always paid in cash. A company may declare a dividend in kind — distributing assets, property, or additional shares (bonus shares or scrip dividends) instead of cash. The WHT treatment depends on the nature of the distribution:

• Bonus shares (stock dividends): The issuance of additional shares to existing shareholders in proportion to their existing holdings is generally not subject to WHT — it is a capitalisation of profits, not a distribution. No cash changes hands, and no WHT is deducted.
• Dividends paid in assets or property: If the company distributes an asset (property, equipment, inventory) as a dividend, WHT applies on the market value of the asset distributed. The paying company must deduct 10% of the market value and remit it to the NRS. This creates a cash flow challenge — the company distributes an asset but must remit cash for the WHT.
• Scrip dividends with cash alternative: Where shareholders can choose between a cash dividend and additional shares, the WHT treatment follows the shareholder’s election — cash dividends attract WHT; share elections generally do not.

Compliance Checklist for the Paying Company

1. Board resolution. Ensure the board resolution declaring the dividend specifies the gross amount per share, the record date, the payment date, and authorises the company secretary or finance team to handle the WHT process.
2. Shareholder register review. Confirm the register as at the record date — names, shareholdings, TINs, residency status, and bank details. For non-resident shareholders, check whether a valid DTA applies and whether a tax residence certificate is on file.
3. Compute WHT for each shareholder. Apply 10% (or the applicable treaty rate) to each shareholder’s gross dividend. Maintain a schedule showing the shareholder name, TIN, gross dividend, WHT rate, WHT amount, and net dividend for every shareholder.
4. Pay net dividends. Credit each shareholder’s bank account with the net dividend amount. For listed companies, coordinate with the registrar to process payments through the e-dividend mandate system.
5. Remit total WHT to the NRS by the 21st. Use the NRS portal or approved payment channels. Reference your TIN, the tax type, and the payment period. Keep the remittance receipt.
6. Issue WHT credit notes. Issue a credit note to every shareholder from whom WHT was deducted — within a reasonable time after payment. Include all mandatory fields: both parties’ names and TINs, gross dividend, WHT rate and amount, payment date, and NRS remittance reference.
7. File the WHT return. File the return with the NRS for the period, declaring total distributions and total WHT.
8. Store all records. Board resolution, shareholder register, WHT schedule, remittance receipt, copies of credit notes, WHT return, and (for treaty-rate shareholders) the tax residence certificates and treaty analysis. Retain for six years.

Final Thoughts

Dividend WHT in Nigeria is mechanically simple — 10% of the gross dividend, deducted at source, remitted by the 21st of the following month. The complexity arises in the details: treaty rates for non-resident shareholders (requiring tax residence certificates and DTA analysis), the distinction between portfolio and substantial holdings (different rates in many DTAs), the interaction with CIT for corporate shareholders (franked investment income and WHT credit offsets), and the severe penalties for the paying company that gets any part of the process wrong (40% for non-deduction, 10% per annum plus CBN rate interest for late remittance).

For shareholders, the system is designed to be effortless — the tax is deducted before the money reaches you, and for individuals, that is the end of the matter. For the paying company, it is an obligation that requires careful execution each time a dividend is declared. The board resolution, the shareholder register, the WHT computation, the payment, the remittance, the credit notes, and the return — each step must be completed correctly and on time. One missed step does not just create a penalty for the company; it creates a problem for every shareholder who does not receive a valid credit note.

Verify your dividend income and WHT with our Tax Calculators. Ask a specific dividend WHT question to the AI Tax Assistant. For DTA analysis, treaty rate applications, or WHT compliance for multi-shareholder distributions, connect with a specialist through the Tax Professional Directory. For the NRS remittance portal, visit selfservice.nrs.gov.ng.

FAQs About WHT on Dividends in Nigeria

What is the WHT rate on dividends in Nigeria?

10% of the gross dividend amount. This applies to dividends paid to Nigerian-resident individuals, Nigerian companies, and non-resident shareholders. The rate may be reduced under a Double Taxation Agreement — typically to 7.5% for shareholders with substantial holdings (10% or more of the paying company’s shares) in treaty countries like the UK, South Africa, China, and Sweden.

Is dividend WHT a final tax for individuals?

Yes. The 10% WHT deducted at source by the paying company is the final tax on dividend income for individual shareholders. No additional income tax is owed on the dividend, and there is no requirement to declare it on your annual PIT return. The paying company handles the deduction and remittance entirely.

Who is responsible for deducting and remitting dividend WHT?

The paying company (the withholding agent). The company deducts 10% from each shareholder’s gross dividend, pays the net to the shareholder, and remits the total WHT to the NRS by the 21st of the following month. Failure to deduct attracts a 40% penalty on the undeducted amount. Failure to remit attracts the principal plus 10% per annum plus interest at the CBN rate.

Do bonus shares attract WHT?

Generally no. Bonus shares (stock dividends) represent a capitalisation of profits — additional shares issued to existing shareholders in proportion to their holdings. No cash is distributed, and no WHT is deducted. However, dividends paid in assets or property (as opposed to additional shares) do attract WHT on the market value of the assets distributed.

How do DTAs affect the WHT rate on dividends?

A DTA between Nigeria and the shareholder’s country of residence may reduce the WHT rate below 10%. The reduced rate typically applies to shareholders with substantial holdings (10% or more of the paying company). The shareholder must provide a valid Certificate of Tax Residence from their home country. The paying company applies the treaty rate and documents the basis. If the treaty rate exceeds 10%, the domestic 10% rate applies — a DTA cannot increase the rate.

Can a corporate shareholder offset dividend WHT against its CIT?

Yes. A Nigerian company receiving dividends from another Nigerian company treats the income as franked investment income. The 10% WHT deducted by the paying company is a credit against the receiving company’s CIT liability. The company collects the WHT credit note and presents it with its CIT return. If total WHT credits exceed the CIT liability, the excess carries forward.

What records must the paying company keep?

The board resolution declaring the dividend, the shareholder register as at the record date, the WHT computation schedule (shareholder name, TIN, gross dividend, WHT rate, WHT amount, net dividend for each shareholder), the NRS remittance receipt, copies of all credit notes issued, the WHT return filed with the NRS, and tax residence certificates for non-resident shareholders where treaty rates were applied. Retain for a minimum of six years.