FIRS Issues Fresh Update On Income Tax

The Federal Inland Revenue Service, FIRS on Thursday said that companies are now to pay tax on income derived from bonds and short-term securities beginning from 2nd of January, 2022. 

The fiscal regulatory body disclosed this on Thursday in a statement via its verified instagram page @firs_nigeria signed by its Executive Chairman, Muhammad Nami.

The body in the statement noted that that the exemption order issued by the Federal Government on the 2nd of January, 2012 which excluded bonds and short-term Government Securities from income tax for a period of 10 years expired on 1st of January, 2022.

The statement further noted that bonds issued by the Federal Government are not affected by the new regulations as taxpayers are enjoined to comply by effecting it in the self-assessment returns and tax computation for their companies.

It reads in part:

"PUBLIC NOTICE ON PAYMENT OF INCOME TAX ON PROFIT FROM BONDS AND SHORT-TERM GOVERNMENT SECURITIES.

"The Federal Government by an Order dated 2nd January 2012 exempted bonds and short-term Government Securities from income tax for a period of 10 years. The exemption expired on 1st January 2022, except for Bonds Issued by Federal Government.

"Consequently, the taxpaying public is hereby invited to note that income tax applies to income derived by companies from bonds and short-term securities effective from 2nd January 2022, except for Bonds Issued by Federal Government. Taxpayers are therefore expected to comply with the law by including such income in the self-assessment returns and tax computation of companies and paying appropriate taxes.

"Similarly, agents of collection of withholding taxes (WHT) are to note the above for deduction of WHT on interest and other payments made to any company on account of income from bonds and other securities.

"For clarity, such bonds and short-term securities on which tax is due effective from 2nd January 2022 include:

(i) Short term Federal Government of Nigeria Securities, such as Treasury Bills and Promissory Notes;

(ii) Bonds Issued by State and Local Governments and their Agencies;

(iii) Bonds issued by corporate bodies including supra-nationals; and

(iv) Interest earned by holders of the Bond and Securities mentioned in paragraph (i) to (iii) above."