How can one get Refunds of Withholding Tax on Dividends?

[riskreturn]

Members of the house, we pay 10% withholding tax on dividends we receive. But, on the basis on Nigerian personal income tax laws, there should be some circumstances that would entitle us (i.e., individual, as opposed to corporate investors) to get refunds of some or all of these withholding tax deductions if and when we file personal income tax returns. I am not very knowledgeable about Nigerian tax laws to know the details and I would like to seek guidance of those that are to please shed some light on this issue.

[knightofdelta]

Originally Posted by riskreturn

Members of the house, we pay 10% withholding tax on dividends we receive. But, on the basis on Nigerian personal income tax laws, there should be some circumstances that would entitle us (i.e., individual, as opposed to corporate investors) to get refunds of some or all of these withholding tax deductions if and when we file personal income tax returns. I am not very knowledgeable about Nigerian tax laws to know the details and I would like to seek guidance of those that are to please shed some light on this issue.

Zainab, I believe this question is for you because I am interested too.

[zainabusman]

Originally Posted by riskreturn

Members of the house, we pay 10% withholding tax on dividends we receive. But, on the basis on Nigerian personal income tax laws, there should be some circumstances that would entitle us (i.e., individual, as opposed to corporate investors) to get refunds of some or all of these withholding tax deductions if and when we file personal income tax returns. I am not very knowledgeable about Nigerian tax laws to know the details and I would like to seek guidance of those that are to please shed some light on this issue.

Unfortunately u cannot get a refund on WHT paid on dividends. It is categorized as final tax. Remember if u have to take it into ur tax return, u have to declare the income. The tax will then be much higher than the 10% WHT u have paid. So infact there is no benefit in including it in ur tax return.

Find below a link to FIRS site that answers the question very briefly.

Federal Inland Revenue Service :: Tax Benefit

[riskreturn]

Originally Posted by zainabusman

Unfortunately u cannot get a refund on WHT paid on dividends. It is categorized as final tax. Remember if u have to take it into ur tax return, u have to declare the income. The tax will then be much higher than the 10% WHT u have paid. So infact there is no benefit in including it in ur tax return.

Find below a link to FIRS site that answers the question very briefly.

Federal Inland Revenue Service :: Tax Benefit

Thanks for the enlightenment. But what of those investors (e.g., housewifes and children) that are exempt from paying other forms of taxes - would personal and other allowances not be "offsettable" against the withholding taxes on the dividends?

[zainabusman]

Originally Posted by riskreturn

Thanks for the enlightenment. But what of those investors (e.g., housewifes and children) that are exempt from paying other forms of taxes - would personal and other allowances not be "offsettable" against the withholding taxes on the dividends?

No. It is a final tax. It has to be paid on the dividend income. A housewife who has income has to pay taxes. Off course it is possible her income could be below the minimum taxable income. In which case she will not pay anything. Unfortunately, she cannot use dividend income to offset.

I think FIRS introduced it because it is much easier to collect WHT on dividend than to be pursuing individuals to make tax returns. This way they are sure of at least 10% instead of nothing.

[riskreturn]

Originally Posted by zainabusman

No. It is a final tax. It has to be paid on the dividend income. A housewife who has income has to pay taxes. Off course it is possible her income could be below the minimum taxable income. In which case she will not pay anything. Unfortunately, she cannot use dividend income to offset.

I think FIRS introduced it because it is much easier to collect WHT on dividend than to be pursuing individuals to make tax returns. This way they are sure of at least 10% instead of nothing.

Thanks! Then I will not pursue the matter further.