FIRS Public Notice: Treasury Bills, Other Government Securities and Bonds Are No Longer Exempt from Companies’ Income Tax

Effective 2 January 2012, former President Goodluck Jonathan signed into law, the Companies Income Tax (Exemption of Bonds and Short-Term Government Securities) Order, 2011. This Act exempted the following instruments and interests earned from them, from companies’ income tax, for a period of 10 years:

1. Short Term Federal Government of Nigeria Securities, such as Treasury Bills and Promissory Notes
2. Bonds issued by Federal, State and Local Governments and their Agencies
3. Bonds issued by corporate bodies including supra-nationals

This 10-year exemption period recently expired on 1 January 2022. The 10-year period limitation did not apply to bonds issued by the Federal Government, which, according to the law, shall continue to enjoy such exemption.

Recently, the Federal Inland Revenue Service (FIRS) also issued a Public Notice to remind the general taxpaying public, particularly companies that invest in treasury bills, bonds, and other government securities about the expiration of this tax exemption period. 

Companies investing in treasury bills, bonds, and other government securities (apart from bonds issued by the Federal government) should please be aware of this expiration of income tax exemption and make adequate provision for the tax impact (including withholding tax at source) of these investments and any interests earned from them, from 2 January 2022.