The Federal Inland Revenue Service (FIRS) has told financial institutions banks to begin deducting a 10% withholding tax on interest paid to investors in short-term securities in a move that could reduce net returns for savers who have relied on tax-free bills.
Nigeria's tax agency circulated this directive in a public notice which also directed that the levy be applied at the point of payment on instruments including treasury bills, corporate bonds, promissory notes, bills of exchange and similar short-term papers. The FIRS said the deduction will be treated as a withholding tax and that investors will receive tax credits for amounts withheld unless the agency specifies otherwise
The agency reiterated that interest on federal government bonds remains exempt from the new withholding requirement, while warning that failure to comply could attract penalties under Nigeria’s tax laws. FIRS Executive Chairman Zacch Adedeji has urged financial institutions to implement the directive and ensure timely remittances.
The FIRS notice and media reports gave no immediate estimate of projected revenues, and the agency said additional technical guidance would be issued to banks and market operators.
