Nigeria’s Federal Inland Revenue Service (FIRS) reported a substantial collection of N2,522,784,805.53 in withholding tax (WHT) during the final quarter of 2024. The data, sourced from BudgIT’s GovSpend platform, indicates a sustained effort by the Federal Government to improve tax compliance across various sectors.
Withholding tax, an advance tax deducted at source from specific payments, is a key component of Nigeria’s tax system. It applies to a range of transactions, including contracts, consultancy services, dividends, interest, royalties, and rent, and is remitted directly to the FIRS by the paying entities. Tax rates vary depending on the payment type, with common rates of 10% for rents, dividends, and interest, and 5% for royalties.
The Q4 2024 WHT remittances originated from various Ministries, Departments, and Agencies (MDAs) of the Federal Government, covering sectors such as power, healthcare, works, and security. Examples include the Federal Ministry of Power remitting over N10 million, and the National Institute for Cancer Research and Treatment contributing over N41 million in WHT deductions from contractors.
Other notable contributions came from agencies like the Nigerian Institute of Oceanography and Marine Research, the Technical Aids Corps, and the National Commission for Refugees, which remitted over N17 million related to skill acquisition programs. The Federal Ministry of Works also made substantial payments, along with significant remittances from security agencies like the National Drug Law Enforcement Agency and the Economic and Financial Crimes Commission.
While the widespread remittance of withholding tax across government bodies suggests a commitment to fiscal responsibility, the overall impact on Nigeria’s revenue base and economic stability requires further analysis. The FIRS’s Q4 2024 collection provides a snapshot of government efforts to strengthen its finances, but the long-term effectiveness of these measures remains to be seen.
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