Whether you are opting out of a paid job to run your own business, or you are entering into business with zero employment experience; one thing is certain: you are becoming an administrator and a business leader if you scale through. As such, it is required that you perform some managerial obligations in the best interest of your business.

This is to expertly prevent you from suffering undue charges in the long run. One such obligation is the issue of Withholding Tax that comes in various ways. Here is a comprehensive guide detailing all you need to know about Withholding Tax in Nigeria.

What is a Withholding Tax?

A withholding tax is basically an advance and indirect source of taxation deducted at source from the invoices of the tax payer. It’s main purpose is to capture as much tax payers that may have evaded tax into the tax net. Withholding tax rates are usually 10% or 5% depending on the type of transaction and collecting authority for the tax (which can be a Federal Inland Revenue or the State Inland Revenue).