In the past, short-term bills were exempt from taxes to draw in investors and enhance returns. With the new regulations, investors will now receive a tax credit for the withheld amount, provided this credit doesn’t exceed the final tax, according to the FIRS.
“All relevant interest payers must adhere to this directive to avoid penalties and interest as stipulated in tax law,” said Zack Adedeji, the Executive Chairman of FIRS.
Nonetheless, officials confirmed that interest on federal debt will still be exempt from this levy.
FIRS advocates for judicially supported fiscal transparency
During a recent training workshop for Supreme Court Justices, Court of Appeal Judges, and Federal High Court Judges, Mr. Adediji emphasized that judicial clarity is crucial for implementing these financial reforms.
He commended the judicial system, describing it as “sound and consistent.” He pointed out that consistent tax rulings are vital for investor trust and fiscal reliability.
“The judiciary, through its interpretive authority, is the ultimate decider in maintaining the delicate balance between the rightful powers of tax authorities and the rights of taxpayers,” he remarked.
Mr. Adediji mentioned that Nigeria’s taxation framework is continually evolving, influenced by the Finance Act and the two Petroleum Industry Acts. He also highlighted the need for a stronger collaboration between courts and tax officials regarding the new withholding tax policy.
“Resolving tax disputes swiftly and based on clear judicial principles fosters compliance and aids economic stability.” He further emphasized FIRS’s commitment to working closely with the judiciary for “knowledge sharing and regular interaction.”
He also pointed out the growing complexities of digital and cross-border transactions in Africa’s tax landscape, arguing that judicial education is increasingly vital.
Adediji expressed hope that judicial collaboration would persist, stating, “This could enhance the quality of tax arbitrage and lead to a fairer, more efficient tax system across Nigeria and the African continent.”
