In a new policy directive, President Bola Tinubu has instructed banks, stockbrokers, and other financial institutions across Nigeria to commence the deduction of a 10% withholding tax on all interest income earned by individuals and organizations from short-term investment instruments.
According to a circular issued by the Federal Inland Revenue Service (FIRS) and obtained by Newday Reporters, the directive covers income generated from a wide range of financial instruments, including government bonds, treasury bills, bills of exchange, promissory notes, corporate bonds, and other financial papers.
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The FIRS, in its public notice released on Tuesday, stated that the implementation of the new tax takes immediate effect.
According to Newday Reporters, under the new policy, financial institutions are required to deduct the 10% withholding tax at the point of payment, that is, before investors receive their interest income, and remit the deducted amount directly to the government in accordance with the provisions of existing tax laws.
The move, according to government sources, is part of efforts to boost revenue generation; however, it has sparked fresh concerns among citizens and investors already grappling with rising inflation and economic hardship under the current administration.
