Hello Tax Experts! please I want to know how is the payments of WHT Tax and obtaining credit note reduces tax liabilities at year end,is it going to reduce corporate Tax liabilities,Directors tax liabilities or PAYEE of individual Staff employee or Directors?

Also,what is a direct assessment for Directors in an Organization and how is this computed and paid to relevant Authorities.
Thank You

withholding (WHT) tax is a an advance payment of company income tax (CIT) in that whatever is deducted from your invoice in a financial year is used to net off your tax liability for that financial year.

the bad side of it is that if the total sum deducted from your invoices in a financial in higher than what your company income tax is computed to be, the balance can not be used to off set future tax liability and getting a refund may require your visiting mountain of fire.

individuals (non corporate entities) also pay with holding tax but at a different rate.

it has nothing to do with staff taxes as they are a different entity in the site of the law and they also earn their on money .

you can choose to treat you directors as normal employees by adding their name to general staff payroll from were you will compute their paye like that of other staffs

God Bless you! but what about direct assessment? and what can you explain of this?,thanks

the credit note is just an indication that the tax authority is indebted to you to the tune of the amount stated on it.

remember that withholding tax is deducted at source by your client who is expected to remit the payment to the tax authorities and collect a credit note for you

Yes i know ,but what is a direct assessment for and why are directors on payroll would still have to make a direct assesment at the end of the year instaed of paying PAYEE at the month end like other Staff.

gentle12:
Yes i know ,but what is a direct assessment for and why are directors on payroll would still have to make a direct assesment at the end of the year instaed of paying PAYEE at the month end like other Staff.

am having difficulty with my internet so maybe later i will explain better.

a director pays withholding tax on his fee if he is payed directors fee or paye if he earns salary like other staffs.

he cant be charged for both taxes

it depends on the method adopted by the organisation

withholding tax on directors fee is 10% while paye for directors is computed in the normal way of computing for other staffs.


ANOTHER NAME FOR DIRECT ASSESSMENT IS SELF ASSESSMENT , DON'T LET IT CONFUSE YOU.

Withholding Tax is the deduction of the tax at source from payment made to a taxable person or company in respect of income derivable from services or investments. It is not another form of tax but simply an advance payment of the tax, as the tax deducted at source can be off-set against any subsequent tax liability that may be due in respect of such income. In certain cases, the withholding tax deducted at source is the final tax e.g. Interest and dividend.
The authority of the deduction of Withholding Tax at source is contained in Sections 69, 70, 72 and 73 of the Personal Income Tax Act in respect of individuals and Sections 78, 79, 80 and 81 of CITA Cap. C21 LFN 2004 in respect of Companies.

The Tax provisions referred to above deal with deductions from rent, interest, royalties, dividends, directors’ fees (PITA only) and other payments.It is under these Sections that the application of the general provisions contained in Section 73 PITA and Section 81 CITA widens the scope of Withholding Tax deductions to including building contracts, contract of supplies, consultancy and professional service, which are not specifically mentioned in the Tax Acts


http://www.irs.lg.gov.ng/tax-types/with-holding-tax/

Thank you 1m times,Aguiyi: I appreciate ur kindness and you have really impacted a knowledge of which i owe you a debt of gratitude,it is well understood now and once again,God Bless

gentle12:
Thank you 1m times,Aguiyi: I appreciate ur kindness and you have really impacted a knowledge of which i owe you a debt of gratitude,it is well understood now and once again,God Bless

you welcome