A withholding tax is an income tax to be paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. Withholding on dividend is charged on gross dividend paid to shareholders, at a rate of 10%.

Procedure:

• Tax should be deducted at source when payment is made.
• The application of the correct rate to each deduction.
• The payment of the tax to the relevant designated bank within 30 days.
• The issuance of receipt to the person who suffered the deduction.
• The WHT schedule alongside evidence of payment should be submitted to the RTA.

The format for the WHT is shown below;

 

In the case of individuals, sole proprietorship, partnership, and other business enterprises which fall within the tax jurisdiction of State Governments, payment should be made to the State Internal Revenue Service. While for Public Limited Companies and Private Limited Companies, payment should be made to the Federal Inland Revenue Service.