FIRS implements 10% withholding tax on short-term government securities

By Seun Ibiyemi

The Federal Inland Revenue Service (FIRS) has issued a notice regarding taxation on investments in short-term securities issued by the Federal Government of Nigeria.

The announcement affects instruments such as government bonds, treasury bills, promissory notes, corporate bonds, financial papers, bills of exchange, and similar securities.

Under the new regulations, a 10 per cent withholding tax (WHT) will be deducted from the interest or discount earned when these investments mature. 

The tax collected will be remitted directly to the relevant tax authority on behalf of the investor.

The withholding tax applies to both individual and corporate investors, although a tax credit will be provided for record-keeping purposes. 

However, certain instruments, including Federal Government Bonds and Open Market Operations (OMO) bills issued by the Central Bank of Nigeria (CBN), are exempt from the withholding tax.

Investment offer letters and related documents will be updated to include the revised tax information, ensuring investors have all relevant details before committing to any investment.