How Withholding Tax Works on Nigerian Investments
Withholding tax (WHT) is deducted at source — the bank, fund manager or registrar removes it before your income reaches you. For most Nigerian investment income the rate is 10%, and for individuals it is generally treated as a final tax on that income. The consequence is simple but often overlooked: the rate you are quoted is not the return you take home unless the instrument is tax-exempt.
Nigerian instruments fall into two camps. Interest on FGN Savings Bonds — and other Federal Government bonds — is exempt under the Nigeria Tax Act 2025, so the full coupon is paid with no deduction. Almost everything else attracts 10% WHT: Treasury Bills (since 28 October 2025), money market fund distributions, fixed deposit interest, and dividends from shares.
A Worked Example: ₦1,000,000.00 in a One-Year Fixed Deposit
Take ₦1,000,000.00 placed for one year at the best indicative bank rate on our Fixed Deposit comparison (16% p.a., manually verified). The gross interest is ₦160,000.00. The bank deducts 10% WHT of ₦16,000.00 at source, so the interest that actually reaches your account is ₦144,000.00. The same ₦160,000.00 earned as FGN Savings Bond coupons would arrive in full — that tax gap is exactly what this calculator makes visible for any amount and any instrument.
Why Tax-Exempt Instruments Punch Above Their Rate
Because WHT scales with your income, a tax-exempt instrument with a lower headline rate can out-earn a taxed instrument with a higher one. An FGN Savings Bond at 14.72% p.a. (the July 2026 DMO offer, 2-year) keeps every kobo of its coupon; a taxed instrument must beat it by more than the tax wedge before it wins on a net basis. The calculator above runs this comparison instrument-by-instrument, and the Investment Comparator lets you put any two head-to-head over your own time horizon.
Frequently Asked Questions
Is FGN Savings Bond interest taxable in Nigeria?
No. Interest on FGN Savings Bonds — as Federal Government bonds — is exempt from withholding tax and personal income tax under the Nigeria Tax Act 2025. The full quarterly coupon is paid to you with no deduction.
Are Nigerian Treasury Bills still tax-exempt?
No. Since 28 October 2025, NTB discount income attracts 10% withholding tax, deducted at source, under the FIRS public notice carried into the Nigeria Tax Act 2025. The earlier exemption under the 2011 order has expired.
Is the 10% withholding tax a final tax for individuals?
For most individual investors, WHT deducted on investment income such as interest and dividends is generally treated as a final tax — you do not pay again on the same income. Circumstances differ, especially for businesses and non-residents, so confirm your position with a tax adviser.
How are dividends from Nigerian shares taxed?
Dividends attract 10% withholding tax, deducted before payment reaches you. Capital gains from the disposal of listed shares are currently treated differently — only the dividend income suffers WHT.
Do I need to file anything to pay WHT on my investments?
No filing is needed for the deduction itself — the bank, fund manager or registrar deducts WHT at source and remits it. Keep your statements as evidence of tax already suffered, and speak to a tax professional about your overall filing obligations.
Tax rules change and individual circumstances differ. WHT treatment shown follows 10% WHT on interest from Treasury Bills and other short-term securities, deducted at source (FIRS public notice; Nigeria Tax Act 2025). The 2011 exemption order has expired. for Treasury Bills and the Nigeria Tax Act 2025 generally — confirm the treatment that applies to you with your bank, broker or a tax adviser.