Banks Begin 10% Tax Deduction On Interest From Treasury Bills, Bonds & Other Short-Term Securities
By OBIOMA TORI
DEPOSIT Money Banks (DMBs) across Nigeria have begun implementing a 10 per cent Withholding Tax (WHT) on interest earned from short-term securities such as Treasury Bills, corporate bonds, promissory notes, and Bills of Exchange, in compliance with a recent directive from the Federal Inland Revenue Service (FIRS).
The new measure, aimed at strengthening tax compliance, mandates banks, stockbrokers, and other financial institutions to deduct WHT on interest payments from short-term investments.
In a notice to customers, Stanbic IBTC Bank confirmed that the 10 per cent WHT would apply to Treasury Bills maturing from November 6, 2025, and all subsequent maturities. The bank clarified that the tax will be deducted at the point of interest payment for securities held to maturity. However, Federal Government bonds and Open Market Operations (OMO) bills issued by the Central Bank of Nigeria are exempt.
The FIRS circular, signed by its Executive Chairman, Zacch Adedeji, urged strict adherence to the rule, warning of penalties for non-compliance. It also stated that taxpayers whose income is subject to WHT are entitled to tax credits equivalent to the amount remitted.
According to the FIRS, the new enforcement aligns with efforts to improve revenue generation and ensure proper taxation of investment earnings within Nigeria’s financial markets.
