An Abuja based financial analyst, Omowunmi Samuel, has clarified that Nigeria is not introducing any new tax on personal savings.
She explained that the Federal Inland Revenue Service is only enforcing an existing law that has always applied to interest earned from investment instruments.
Withholding tax, taxes on savings, financial instruments
President Bola Tinubu’s government introduces a sweeping tax reforms, strengthens existing ones.
Her clarification comes after social media posts suggested that the government plans to impose fresh taxes on Treasury bills, corporate bonds, and other short term securities. Samuel said these claims are misleading and have created confusion about how investment income is taxed in the country.
Withholding tax on interest already in place for years
Speaking, Samuel noted that the withholding tax deducted from interest income is not a new policy. It is backed by the Companies Income Tax Act, which empowers the FIRS to collect tax at source from returns generated on financial instruments.
She said the policy has existed for several years and should not be mistaken for a sudden attempt to tax citizens’ savings. The FIRS, she added, only issued a reminder to financial institutions to ensure full compliance with a rule that has already been in place.
No tax on savings, only on interest earned
The analyst stressed the need to separate personal savings from the interest they generate. Savings deposits themselves are not taxable, but the interest earned on those deposits is treated as income and therefore falls under the tax law.
She said the misunderstanding largely stems from this distinction, which many people overlook.
According to her, “The tax applies to income generated from investments, not the money people set aside.”
Exemption window has closed
A temporary exemption that previously applied to interest from short term investments expired last year. This means financial institutions are now expected to resume full withholding tax deductions on such earnings.
Samuel explained that this development is part of a broader effort to strengthen compliance, not a new tax directive.
She added that the renewed enforcement aligns with global standards where many countries automatically deduct tax from investment income to improve revenue collection.
Linked to Nigeria’s 2025 tax reform drive
The enforcement is tied to Nigeria’s wider 2025 tax reform strategy, which aims to bolster non-oil revenue at a time when crude output remains low and public debt continues to rise. Samuel said the government is working to enhance efficiency in its revenue system without imposing fresh tax burdens on citizens.
Analyst urges public to avoid misinformation
Samuel cautioned that unverified claims about new taxes can create unnecessary fear.
She encouraged Nigerians to rely on accurate information and official guidance to avoid confusion.
FIRS, tax on savings, federal government
The FIRS chairman, Zaach Adedeji, champions Nigeria’s tax reforms.
She said the FIRS is focused on making sure taxable investment income is properly accounted for, just as it has always been, and that Nigerians’ personal savings remain untouched.
New tax law replaces reliefs with rent-based deductions
Earlier reported that the federal government has overhauled Nigeria’s personal income tax structure by eliminating the consolidated and personal relief allowances and replacing them with a new rent-based deduction capped at N500,000.
This reform is contained in the newly enacted Tax Act, which redefines how taxable income is calculated for individuals.
According to the Act, taxable income now comprises profits from business, employment, investments, and capital gains, with total income computed after all approved deductions are removed.
