FIRS Rolls Out 10% Tax Grab on Quick Investment Gains

Nigeria's Federal Inland Revenue Service has unveiled a new 10 percent withholding tax targeting interest earned from short-term investments, catching savers and fund managers off guard.

The rule applies to earnings from treasury bills, commercial papers, and similar instruments held for less than 182 days. Officials say the move aims to widen the tax net and capture revenue from high-frequency traders who previously slipped through.

Bankers and portfolio advisors scrambled to digest the announcement, warning clients of slimmer returns on popular money market products. One fund manager called it a "stealth hit" on liquidity tools that businesses rely on for daily cash flow.

Under the fresh guidelines, financial institutions must deduct the levy at source before crediting investor accounts. The tax will then flow straight to government coffers, simplifying compliance but shrinking take-home yields.

Industry voices argue the timing could not be worse, with inflation still gnawing at purchasing power. They fear the policy might push capital toward untaxed informal channels or overseas havens.

FIRS insiders defend the measure as fair play, noting that long-term deposits above six months remain exempt. They insist the change aligns Nigeria with global standards where brief holdings face higher scrutiny.

Market watchers predict a rush to lock funds into longer maturities before the rule kicks in. Treasury bill auctions may see lighter bidding in the coming weeks as players recalculate risks.

For everyday savers parking spare cash in high-interest accounts, the bite will be immediate. A hundred thousand naira earning five percent over three months now loses five hundred naira upfront to the taxman.

Regulators promise clearer directives soon, including how the deduction interacts with existing personal income tax. Until then, investment desks across the country buzz with urgent client calls.

The policy underscores a broader push to plug revenue leaks amid tight budgets. Whether it boosts public funds without choking private capital remains the million-naira question.