FIRS announced that interest from short-term securities investments will now be subject to withholding tax.
Nigeria’s Federal Inland Revenue Service (FIRS) issued a public notice on 17 September 2025, mandating withholding of tax on interest earned from short-term securities investments.
This Notice is issued for the information, guidance and compliance of Banks, Discount Houses, Stockbrokers, Corporate Bond Issuers, Primary Dealer Market Makers (PDMMs), other financial institutions, government agencies, tax practitioners, and the general public.
Sections 78(1) and 81(1) of the Companies Income Tax Act (CITA) (as amended), and the Deduction of Tax at Source (Withholding) Regulations, 2024, provide that tax be deducted from interests payable to any person (including non-corporate entities) on the date of payment.
Accordingly, tax shall be deducted from all interest payments on investments in short-term securities on the date of payment at the applicable rate.
The tax shall be deducted and remitted to the relevant tax authority not later than the 21st day of the month following the month in which the payment occurred.
The person from whose payment the tax was deducted is entitled to a tax credit equal to the amount withheld and remitted, except where the tax deducted is the final tax.
Interest on bonds issued by the Federal Government is exempt from tax deduction.
Short-term securities include (but are not limited to) government bonds, treasury bills, promissory notes, corporate bonds, financial papers, bills of exchange, etc.
All relevant interest-payers are required to comply with this Circular in order to avoid the imposition of penalties and interest as stipulated in the tax law.
