Circular on the Expiration of the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011

The Securities and Exchange Commission (SEC) wishes to bring to the attention of all regulated entities and stakeholders that the ten-year period granted under the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011 lapsed in December 2021. As a result, interest income from the following instruments may now be subject to applicable tax obligations under the Companies Income Tax Act (CITA), Cap C21, Laws of the Federation of Nigeria, 2004 (as amended):
– Treasury bills and promissory notes
– Bonds issued by Federal, State, and Local Governments and their agencies – Bonds issued by corporate entities and supra-national organizations – Interest earned by holders of the aforementioned instruments It may be useful to note that tax exemption for bonds issued by the Federal Government of Nigeria (FGN) continues to be recognized under existing legislation. With the expiration of the legal framework that previously provided the exemption, the deduction of Withholding Tax (WHT) at the point of payment should be considered in line with prevailing statutory provisions. Parties involved in issuing or processing payments relating to these instruments may wish to take appropriate steps to ensure alignment with current tax compliance requirements. SIGNED:
MANAGEMENT