Nigeria’s Federal Inland Revenue Service (FIRS) has announced plans to implement a 10 percent withholding tax on interest earned from short-term securities, including treasury bills and fixed deposits, in a bid to expand the government’s non-oil revenue base.
According to a circular issued by the FIRS and cited by BusinessDay, the new tax measure will apply to interest payments on debt instruments with maturities of one year or less, such as commercial papers and banker’s acceptances. The policy is expected to take effect from January 2026, giving investors and financial institutions time to adjust their portfolios.
The decision aligns with President Bola Tinubu’s broader fiscal reform agenda, which aims to enhance domestic revenue mobilization amid growing budget deficits and reduced oil earnings. A senior official at the FIRS stated that the measure would “ensure a fair contribution from the financial sector and improve equity in the tax system.”
Analysts note that while the move could raise government revenue in the short term, it might also dampen demand for short-term investment instruments, potentially driving investors toward longer-term securities or alternative assets.
The development follows a series of tax reforms initiated under the 2024–2026 Medium-Term Revenue Strategy, which seeks to raise Nigeria’s tax-to-GDP ratio from 10 percent to at least 18 percent by 2026, as reported by Bloomberg.
