What to Know as FIRS Issues New Directive on 10% Withholding Tax for Investment Interest

The Federal Inland Revenue Service (FIRS) has issued new guidelines on how Withholding Tax (WHT) applies to interests earned from short-term investment securities.

In line with Sections 78(1) and 81(1) of the Companies Income Tax Act (CITA) and the Withholding Tax Regulations 2024, interest income payable to any person, including corporate and non-corporate entities, is now subject to WHT at the point of payment.

Key Highlights of the Directive:

• The law requires that a 10% Withholding tax is deducted from the interest you receive when your investment matures.
• The withholding tax deducted will be remitted directly to the relevant tax authority on your behalf, not later than the 21^stday of the month following the month in which the payment occurred.
• Withholding Tax applies to both individual and corporate investors.
• A tax credit will be available for your records.

The following investment instruments are now subject to WHT (10%):

• Treasury Bills
• Corporate Bonds
• Promissory Notes
• Bills of Exchange

The following investment instruments are now exempt from WHT:

• Federal Government (FGN) Bonds
• Open Market Operation (OMO) Bills issued by the Central Bank of Nigeria

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