22/02/2023
I want to shed light on the administration of withholding tax in Nigeria. I will try to be brief.
Withholding tax is not within the exclusive jurisdiction of the Federal Inland Revenue Service.
The tax is being administered by both State and Federal governments through State Internal Revenue Service and Federal Inland Revenue Service.
If you deduct withholding tax from income due to a limited liability company, the amount withheld should be remitted to the Federal Inland Revenue Service.
On the other hand, if you deduct withholding tax from income due to an individual or enterprise, the tax deducted should be remitted to the State Internal Revenue Service.
It is important that you remit the withholding tax to the appropriate relevant tax authority, otherwise you will need to pay the tax twice thereby leading to double taxation. That is, if you paid withholding tax meant for Federal Inland Revenue Service to State Internal Revenue Service, Federal Inland Revenue Service will still request that you pay the money if discovered during tax audit.
What happens if you didn’t deduct? You have failed to comply with the tax laws, and you will need to pay the tax that you failed to deduct to the government (including penalty and interest)
