Overview
IntroductionThe Federal Inland Revenue Service (FIRS), on September 17, 2025, issued a Public Notice on “Withholding of Tax from Interest on Investment in Short-term Securities” (the Notice), which mandates the deduction of tax at source (withholding) from interest on investment in short-term securities. This Notice is pursuant to 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 (Withholding Regulations). This underscores the federal government’s drive to widen its tax base, enhance compliance with existing tax laws, and increase non-oil revenue. According to the FIRS, withholding tax shall be deducted from interest payable to any person, including non-corporate entities, on the date of payment at the applicable rate.
The Notice does not, however, stipulate a commencement date; for this reason, it is presumed that the Notice is intended to take effect from the date of its publication. The subsequent paragraphs of this piece provide an overview of the Notice and a commentary to ensure a nuanced understanding. Entities to be Guided by this NoticeThe Notice is issued as both a guide and a compliance directive for entities, such as banks, discount houses, stockbrokers, corporate bond issuers, primary dealers/market makers, financial institutions, government agencies, tax practitioners, and the public.
All those required to deduct the tax, as mentioned above, are to remit it no later than the 21st day of the month in which the interest was paid.[1] This presumption is anchored on the established legal principle that a law (including a notice) takes effect on the day it is published, except otherwise provided. See Nwokobia & Ors v Okonta [2019] LPELR-47797 (CA) 17-18.
