Nigerians have reacted with anger and frustration to a new directive by the Federal Inland Revenue Service (FIRS) mandating the deduction of tax from interest earned on short-term investments.
The FIRS notice, signed by its Executive Chairman, Zacch Adedeji, stated that the new rule requires financial institutions and corporate bodies to deduct tax at the source from investment interest before payment is made to investors.
According to the circular, the decision aligns with Sections 78(1) and 81(1) of the Companies Income Tax Act (CITA) as amended, and the Deduction of Tax at Source Regulations, 2024.
The tax will apply to interest on Treasury Bills, corporate bonds, promissory notes, commercial papers, and other short-term securities, with remittances due to tax authorities not later than the 21st day of the month following the payment.
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The circular also stated that “Interest on bonds issued by the Federal Government is exempt from tax deduction,” and “Interest on OMO Bills issued by the Central Bank of Nigeria is not liable to tax deduction.”
This announcement, which was shared on X by user @ProfitableMan1, warned investors that the government “is now coming for your ‘safe’ investment returns.”
He explained that “A new notice from the Federal Inland Revenue Service (FIRS) means your interest from short-term investments like Treasury Bills, corporate bonds, and commercial papers will now be taxed at the source.”
“This means before your interest is paid, tax will be deducted automatically,” he added, noting that investors expecting “10% returns” would now “get less.”
The post quickly went viral, drawing widespread criticism and confusion among Nigerians who accused the government of imposing excessive taxes amid rising inflation and unemployment.
One user, @Bargain-Hunter, lamented, “Another one! The rate at which this government is going about exploring new ways of generating revenue, eh? If half of that energy is channelled to providing good governance, Nigerians will gladly pay their taxes without grumbling.”
Another commenter, @TechZaddy, remarked, “Everyone saying ‘this is not new’, just don’t forget that the many ways of syphoning the revenue are also not new.”
A user identified as @soccerman criticised the administration, saying, “Tinubu and his APC thieves are stealing everything in sight.”
Similarly, @D☰ΠZί added, “Tax Tax Tax and steal under Tinubu/APC government.”
While some commenters pointed out that the directive was not entirely new, they noted that its enforcement could deepen financial pressure on citizens.
Financial experts also noted that while withholding tax had long existed, the updated regulation now expands its reach to cover a wider range of short-term instruments.
Tax consultant @kayodeokunola clarified, “What you wrote is different from the circular,” urging investors to read the fine print before reacting.
Another user, @Honor, wrote, “WHT has always been taxed this way; if you were a tax practitioner or consultant, you would know. Read #5 & #6 again. Some market instruments (G Bonds, OMO bills) are exempted. The withheld tax can also be claimed as a tax credit.”
Despite these clarifications, many Nigerians view the move as part of a wider pattern of what they call “fiscal aggression” under Bola Tinubu’s administration, accusing the government of prioritising revenue over citizens’ welfare.
Social media users described the move as “yet another attempt to drain struggling Nigerians”, warning that the constant introduction of new taxes could discourage savings and investment.
Critics argue that the government’s growing dependence on taxes reflects its inability to cut wasteful spending or improve accountability in public finance.
As outrage continues online, the FIRS has yet to issue a public statement addressing the backlash or clarifying how the new measure will affect existing investors.
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