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According to section 79 the Companies Income Tax Act(CITA), a company must deduct 10% withholding tax(WHT), before paying or crediting the landlord with the balance. The company paying such rent shall, at the date when the rent is paid or credited, whichever first occurs, deduct withholding tax and shall forthwith pay over to the Board the amount so deducted. 

So the withholding tax must be deducted even when the landlord was yet to be paid, provided the rental liability has been ascertained, acknowledged and recorded in favour o f the Landlord.

The state government Board of Internal Revenue collects WHT from Individuals under the Personal Income Tax Act, whilst the Federal Inland Revenue collects tax on behalf of the Federal Government under the Company Income Tax Act.


Assume XYD Ltd normally prepays its office rent to the Landlord on the first working day of December, each year, at the rate of N800, 000 per annum. The accounting year of the company runs from January to December, same with the rental period. However due to cash flow challenges, the rent was subsequently paid on February 2 3, 2021.

The company must have withheld N80, 000 and credited the landlord with the balance of N720, 000,in its financial statement as at December 2020. The tax authority is not interested in if or when the Landlord was eventually paid.

Persons authorized to deduct tax includes government departments, parastatals, statutory bodies, institutions and other establishments approved for the operation of Pay As You  Earn System. 

 The tax, when paid over to the Board, shall be the final tax due from a non‐resident recipient of the


 In accounting for the tax so deducted to the Board, the company paying the rent, shall state in writing the following particulars: 

(a)   the gross amount of the rent payable per annum; 

(b)   the name and address of the recipient and the period in respect of which such rent has 

    been paid or credited; 

(c)   the address and accurate description of the property concerned; and 

(d)   the amount of tax being accounted for. 

The tax law also states that any reference to rent in  section 79 shall be construed whenever necessary as including payments for the use or hire of any equipment, payments for charter vessels, ship or aircraft and all such other payments for the use of or hire of movable and immovable property.

Penalty for non deduction and remittance

Any person who does not deduct withholding tax on rent or having deducted fails to pay to the Board within thirty days from the date the amount was deducted or the time the duty to deduct arose, shall be guilty of an offence and shall be liable on conviction to a fine of 200 per cent of the tax withheld or not remitted, as the case may be. 

In our illustration above, the duty to deduct arose as at December 30, 2020 and the remittance was due latest January 30,2021.

Where the person that was suppose to deduct withholding tax is a ministry, department, parastatal, institution or an agency of the Federal or a State Government or is a local government, the Tax Board may authorise the Accountant‐General of the Federation in writing to deduct from the allocation of such Federal ministry, department, parastatal, institution or agency of the State Government or local government such amount of tax deductible plus interest at the prevailing commercial rate. 

 Tax deducted under section 79 of CITA shall be paid to the Board in the currency in which the deduction was made. 

Post Author: Deeno

One Reply to “Nigerian Tax Law Requires Tenants to Deduct Withholding Tax on Rent, Also Prescribes Penalty”

  1. Good day, does it mean even if I have not paid the vendor his money, I should go and ahead and remit the WHT deducted? In your example I remit the WHT before January 30 and probably pay the vendor in march. Does it make sense?
    Pls explain further.

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