Guides & compliance

PAYE vs Withholding Tax (Nigeria)

PAYE is deducted from employee salaries through payroll. WHT is withheld on specific non-employment payments. They are not interchangeable.

PAYE vs Withholding Tax (WHT)

  • PAYE: personal income tax deducted from employee salary via payroll.
  • WHT: tax withheld on certain payments (often vendor/service payments) and remitted as an advance tax credit for the recipient.

They solve different compliance needs; do not treat WHT as payroll tax.

When each applies

  • PAYE applies to employment income.
  • WHT applies to specific non-employment transactions (depending on rules and transaction type).

Common confusion points

  • Classifying contractors as employees (or vice versa)
  • Mixing payroll records with vendor remittance schedules
  • Not keeping proof of remittance and credit notes