United Bank for Africa (UBA) Plc has reaffirmed its commitment to full compliance with the latest directive issued by the Federal Inland Revenue Service (FIRS) concerning the taxation of investments in short-term securities issued by the Federal Government of Nigeria.
The FIRS publication aims to enlighten investors, discount houses, stockbrokers, corporate bond issuers and holders, as well as the general public, on the need for collective compliance with tax obligations arising from investments in government and corporate securities.
According to the notice, the FIRS provided clarifications on: The legal basis for the imposition of Withholding Tax (WHT) on interest income earned from short-term securities; The application of WHT deductions on both corporate and individual investors; The responsibility of institutions to deduct and remit such taxes to the appropriate authorities; The tax credit benefits available to investors whose interest income has been subjected to WHT deductions; and The exemption of WHT on Federal Government Bonds and Open Market Operation (OMO) bills issued by the Central Bank of Nigeria (CBN).
The publication also provides a clear definition of “short-term securities” to include Government Bonds, Treasury Bills, Promissory Notes, Corporate Bonds, Financial Papers, and Bills of Exchange.
In response, UBA Plc stated that it will ensure 100% adherence to the directive, adding that a 10% withholding tax rate will be applied to the interest (discount) at maturity, with all deductions duly remitted to the relevant tax authorities.
“We are working closely with our support teams to ensure that the relevant details and tax implications are fully integrated into offer letters for investors going forward,” the Bank said.
“UBA remains committed to keeping clients informed of any further regulatory updates that may affect their investments,” it added.