AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Yes. Under a directive issued in October 2025, interest on short-term securities including treasury bills is subject to a 10% withholding tax, deducted by the bank or dealer that pays you. FGN bond interest remains exempt. Before 2025, short-term bills were treated as tax-exempt, so older guides on this are now out of date.
For years Nigerian savers were told treasury bills were tax-free. That is no longer the position. Since late 2025, interest on treasury bills has been subject to withholding tax. This article explains what changed, how the deduction works, how it compares with FGN bonds and fixed deposits, and what to check on your own statement. It is information with sources, not tax advice.
What changed in 2025
On 28 October 2025 the Federal Inland Revenue Service announced a directive requiring a 10% withholding tax on interest earned on short-term securities, as reported by Reuters via Bizcommunity the next day. The report names treasury bills, corporate bonds, promissory notes and bills of exchange as examples and notes that short-term bills were previously tax-exempt. Interest on Federal Government bonds stays exempt.
KPMG's summary of the public notice (4 December 2025) adds the mechanics: the institution paying the interest deducts the tax on the payment date and remits it by the 21st of the following month, and recipients of non-final deductions receive a tax credit. The tax authority is now called the Nigeria Revenue Service (NRS), according to PwC Nigeria's summary of the 2025 reform Acts.
How the deduction works on a discount instrument
A treasury bill pays no coupon. You buy it below face value and receive the full face value at maturity; the difference is your interest. The withholding tax is a percentage of that interest, not of the whole amount. How it appears on your statement depends on your bank or broker: some take it at maturity, others may show it when you buy. Ask yours.
| Step | Amount |
|---|---|
| Face value | ₦1,000,000 |
| Price you pay | ₦850,000 |
| Interest (face minus price) | ₦150,000 |
| Withholding tax at 10% | ₦15,000 |
| Interest after tax | ₦135,000 |
In this example the tax costs ₦15,000, which takes a return of 17.65% on the money you put in down to 15.88% over the life of the bill.
Is it a final tax?
That depends on who you are. The KPMG summary refers to a tax credit for non-final deductions, which matters most to companies, who can set the deduction against their own tax bill. For individuals, whether the deduction settles your liability or must be declared depends on your wider tax position under the 2025 Acts. Our guide to withholding tax on interest covers the general rules; check your own case with the NRS or an adviser.
Treasury bills against the alternatives, after tax
| Product | Tax on interest (as reported, Oct 2025 to Aug 2026) |
|---|---|
| Treasury bills | 10% withholding tax under the 2025 directive |
| FGN bonds | Exempt, per the directive and DMO offer wording (Aug 2026) |
| FGN Savings Bonds | The DMO portal FAQ says bonds are not taxed |
| Bank deposits | Interest is generally subject to withholding tax; ask your bank |
| Commercial paper and corporate bonds | Corporate bonds named in the directive; check CP with your dealer |
The practical effect is that a treasury bill now needs a slightly higher yield to match an FGN bond of similar return. When comparing, multiply the bill's interest by 0.9 first. See treasury bills or FGN bonds and fixed deposit against treasury bills after tax.
What it means for small savers
For someone putting ₦200,000 into a 364-day bill, the tax is a small sum in naira terms, but it changes the comparison with other options. Money market funds that hold treasury bills may also see lower income after the change, because the bills inside them are taxed at source; check the fund's latest factsheet for its stated yield rather than assuming last year's figure. Savings apps that say their rates are linked to treasury bills may adjust their rates for the same reason.
Two habits help. First, always compare yields after tax, not before. Second, think about the date you need the money and pick a tenor that matches it, so you are not paying tax on a bill and then losing more by selling early. Our guide to choosing between 91, 182 and 364 days covers that choice.
Older guides are out of date
Many articles written before October 2025 still describe treasury bills as tax-free. The Reuters report says short-term bills were previously exempt, which is where that belief comes from. If a provider's marketing still says "tax-free", ask it to confirm in writing whether it deducts the 10%.
What to check first
- Ask your bank, broker or app when it deducts the tax and how it shows on your statement.
- Keep the contract note or confirmation showing purchase price and face value.
- Ask for a withholding tax credit note if you are a business.
- Check NRS public notices for any update to the rate or scope.
Where Pryme fits
Pryme does not sell treasury bills. If maturity proceeds land in a Pryme account, a verifiable statement made through VerifyDoc.ai (receipts and statements) gives your accountant a record of what arrived.
Questions people ask
Is treasury bill interest tax free in Nigeria?
Not any more. Since an October 2025 directive, interest on treasury bills is subject to 10% withholding tax.
Who deducts tax on my treasury bills?
The bank, dealer or platform that pays you the interest deducts it and remits it to the tax authority by the 21st of the following month.
Are FGN bonds taxed like treasury bills?
No. The same directive says interest on Federal Government bonds remains exempt.
Does the 10% tax apply to the whole treasury bill amount?
No. It applies to the interest, which is the difference between face value and the price you paid.
Sources
- Bizcommunity (Reuters): Nigeria to impose 10% withholding tax on interest on short-term securities (29 Oct 2025) · accessed Oct 2026
- KPMG TaxNewsFlash: Nigeria guidance on withholding tax on interest from short-term securities (4 Dec 2025) · accessed Oct 2026
- PwC Nigeria: The Nigeria tax reform Acts, top 20 changes (Jun 2025) · accessed Oct 2026
- DMO subscription portal: Frequently Asked Questions · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.