Withholding tax: pay the State or the NRS?
Whether withholding tax a Nigerian business deducts goes to the NRS or a State revenue service, the dates the sources give, and how to split a payment run.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
Nigeria has one federal revenue service and a revenue service in every State, and withholding tax can belong to either. A business in Abuja that pays a sole trader in Kano, a company in Lagos and a consultant in Ghana in the same week may owe the deducted tax to three different places, depending on who was paid.
Send the money to the wrong authority and it does not count where it should. The supplier's credit goes missing, the right authority treats the tax as unremitted, and getting it moved is slow. This guide sets out the split, the dates the published sources give, and how to sort a payment run before anything is remitted.
The rule turns on who was paid
The Lagos State Internal Revenue Service sets the split out plainly in its frequently asked questions, which cover withholding tax and PAYE remittance. The LIRS FAQs say:
- withholding tax deducted from payments to individuals and business names is payable to the State Internal Revenue Service of the State where the recipient is resident; and
- withholding tax deducted from payments to corporate entities, or to non-resident individuals and corporate entities, is payable to the Nigeria Revenue Service.
The FAQs tie this to the Deduction at Source (Withholding) Tax Regulations 2024, the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025.
Two practical points follow. The test is the recipient's status and residence, not where your business is based or where the work was done. And a registered business name is not a company: a sole trader trading under a business name is treated with individuals, so the tax goes to the State where that trader lives, while a limited company's tax goes to the NRS even if the two trade side by side.
Payments to companies and non-residents
For company recipients the position is simpler. The NRS says tax deducted at source that is payable to it must be remitted not later than the 21st day of the month following the month of payment. The LIRS FAQs give the same 21st-day date for amounts due to the NRS, and say the due date runs from the earlier of the date the amount was deducted or the date the obligation to deduct arose.
Non-residents always fall on the NRS side, whether they are companies or individuals, because they have no Nigerian State of residence.
The dates the LIRS FAQs give for State payments
For amounts due to a State revenue service, the LIRS FAQs say capital gains tax and PAYE deducted must be remitted not later than the 10th day of the following month. The NRS's own withholding tax page gives the same 10th-day and 21st-day dates.
For other withholding tax payable to a State, the published sources do not line up. The NRS's page and the LIRS FAQ each mention a later date for some State deductions, but those dates do not match the remittance deadline in the Act, so State withholding tax remittance dates are best treated as uncertain. The safe course is to remit by the Act's date, set out below, and confirm with the State concerned.
The Act's remittance date and its penalty
Under section 107(1) of the Nigeria Tax Administration Act, 2025, a person who deducts, collects or withholds tax and fails to remit it by the 21st day of the month immediately succeeding the month of deduction is liable to pay the amount not remitted, an administrative penalty of 10% per annum of that amount, and interest at the prevailing Central Bank of Nigeria monetary policy rate. The section does not distinguish between federal and State recipients. Treating the 21st as your outer limit for every deduction keeps you inside it whichever authority is owed. For the penalties in more detail, see withholding tax remittance penalties.
State revenue services in Achekam
Achekam lists all 36 State Internal Revenue Services and the FCT-IRS. It gives a website only for the FCT-IRS and Kaduna's KADIRS, and it leaves every State filing and payment to the State's own channel: you file and pay each State through that State's portal or office, then keep the evidence with your records.
Achekam's tax calendar computes objection and appeal deadlines for Nigerian assessments from the approved administration rule, and it leaves out any deadline whose rule is awaiting approval or contested, saying why. If a date you expect is missing from the calendar, treat it as unsettled rather than absent, and diarise the 21st yourself. PAYE runs on the same State-by-State split; PAYE schedules by State covers it.
Sorting a payment run by who gets the tax
Before remitting each month:
- List every payment with withholding in the month.
- Mark each recipient as a company, an individual or business name, or a non-resident.
- For individuals and business names, record the State where the recipient lives.
- Total the tax for the NRS: companies and all non-residents.
- Total the tax for each State: resident individuals and business names, grouped by State.
- Remit each total through the right channel by the 21st, and keep each receipt with its schedule.
A worked example in words: in one month a business pays a carpenter who trades under a business name and lives in Ogun, a Lagos-registered limited company, and a software consultant based in Kenya. The carpenter's deduction goes to the Ogun State revenue service; the company's and the consultant's go to the NRS. Three payments, two authorities, one deadline to aim for.
Ask new suppliers at onboarding whether they are a company or a business name and where they live. With those two answers on file, the split is decided before the first payment is made.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
