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
If you are tax resident in South Africa, interest from a Nigerian fixed deposit is foreign-source income and goes in your SARS return in full: the annual interest exemption (R23,800 under 65, R34,500 from 65 for 2027, per SARS's August 2026 page) applies only to interest from a South African source. Nigerian withholding tax deducted from the interest can be credited against SA tax under section 6quat, but only up to the rate the Nigeria-South Africa tax treaty allows.
The exemption question first
Many Nigerians in South Africa assume their naira fixed deposit interest falls inside the SARS interest exemption. It does not. SARS's interest and dividends rates page, last updated 19 August 2026, says the exemption is for "interest from a South African source earned by any natural person" and lists the amounts:
| Tax year | Under 65 | 65 and older |
|---|---|---|
| 2025 | R23,800 | R34,500 |
| 2026 | R23,800 | R34,500 |
| 2027 | R23,800 | R34,500 |
The page notes that the 25 February 2026 Budget left these amounts unchanged. Interest on a deposit with a Nigerian bank is not South African-source, so none of it is covered. It is added to your taxable income and taxed at your marginal rate along with salary and other income.
Who this applies to
The rule bites only if SARS treats you as tax resident in South Africa. A Nigerian on a work visa who lives and works in Johannesburg will often be resident; someone on a short assignment may not be. Residence has its own tests, explained in the SARS tax residence test for Nigerians. If you are not SA resident, SARS generally does not tax foreign interest, but Nigeria still does.
Nigerian withholding tax and the treaty rate
Nigerian banks deduct withholding tax from interest before crediting you. PwC's Nigeria withholding tax summary (reviewed 29 May 2026) lists 10% on interest for residents and non-residents, and 7.5% on interest under the treaty with South Africa, one of five treaty partners at that rate.
SARS's Interpretation Note 18 (Issue 5, December 2022) explains the section 6quat rebate, South Africa's main relief for double taxation. In short:
- The foreign tax must be "proved to be payable": an unconditional liability, supported by a certificate or statement from the bank.
- It must relate to foreign-source income included in your SA taxable income.
- Where a treaty caps the foreign tax, only the treaty amount counts. Anything taken above it is treated as recoverable from the foreign country and does not qualify.
- The rebate cannot exceed the SA tax on that foreign income, worked out by the ratio of foreign taxable income to total taxable income.
- Foreign tax is translated into rand under section 6quat(4).
So if your Nigerian bank deducts 10% while the treaty rate is 7.5%, SARS credits only 7.5%. The extra 2.5% is a claim against the Nigeria Revenue Service, not SARS. Our explainer on the SA-Nigeria double tax agreement covers how treaty rates are claimed at source.
Worked example
Example only, with an illustrative exchange rate of R1 = ₦80. You hold ₦10,000,000 for a year at 18%. Gross interest is ₦1,800,000. The bank deducts 10% (₦180,000) and credits ₦1,620,000.
| Line | Naira | Rand at R1 = ₦80 |
|---|---|---|
| Gross interest declared to SARS | ₦1,800,000 | R22,500 |
| Nigerian tax deducted (10%) | ₦180,000 | R2,250 |
| Treaty-limited tax (7.5%) | ₦135,000 | R1,687.50 |
| Excess not credited by SARS | ₦45,000 | R562.50 |
If your marginal SA rate were 31%, SA tax on R22,500 would be R6,975. The section 6quat rebate is the lower of the creditable foreign tax (R1,687.50) and the SA tax on that income, so R1,687.50, leaving R5,287.50 to pay to SARS. Check: 6,975 − 1,687.50 = 5,287.50. The 31% is an illustration, not your rate.
Timing, rollovers and common mistakes
SARS taxes interest in the year it accrues or is received, not when you bring the money to South Africa. A one-year deposit opened in September and maturing the next September can straddle two SA years of assessment, so ask the bank for a statement that shows interest by date. If the deposit rolls over automatically, the interest added at each rollover is income at that point even though it never leaves Nigeria.
- Declaring the net figure. Declare the gross interest and claim the Nigerian tax as a credit; declaring the net amount and claiming the credit as well counts the tax twice in your favour.
- Claiming the full 10%. Only the treaty-limited amount is creditable; the rest has to be reclaimed in Nigeria.
- Ignoring small deposits. There is no foreign-interest exemption to absorb small amounts, so even modest interest is declared.
- Joint accounts. Interest on a joint deposit is usually split by each holder's share; agree the split with your co-holder and declare only your part.
- Missing evidence. Without a bank certificate the Nigerian tax may not be accepted as proved payable.
How to report it
- Ask your Nigerian bank for an annual interest statement and a withholding tax certificate or credit note for each deposit.
- Convert each amount to rand at the rate you will use consistently, and keep the rate source with your workings.
- Declare the gross interest as foreign interest in your ITR12 on eFiling, not the net amount received.
- Claim the foreign tax credit, limited to the treaty rate, and keep the bank certificate in case SARS asks.
- Keep the fixed deposit certificate, the rollover letters and the statements for at least the period SARS can review.
Rolled-over deposits still produce interest each year even if you never move it, so declare it when it is earned or credited. If you are new to SARS, start with declaring Nigerian income on eFiling. This is information, not tax advice; a registered tax practitioner can confirm your position.
Where Pryme fits
Pryme's Savings Boxes are for naira held in Nigeria and show their rates in the app before you choose; the Investment Box is held to maturity and its return depends on the lending it funds. Whatever you use, any customer can generate a regular or verifiable statement through Pryme's partnership with VerifyDoc.ai, which is useful evidence for SARS (receipts, Boxes).
Questions people ask
Is Nigerian interest covered by the SARS interest exemption?
No. SARS says the exemption applies to interest from a South African source, so interest from a Nigerian bank is taxable in full if you are SA tax resident.
Do I pay tax twice on Nigerian fixed deposit interest?
Not fully. SARS gives a section 6quat rebate for Nigerian tax proved payable, limited to the treaty rate and to the SA tax on that income.
What is the treaty withholding tax rate on interest between Nigeria and South Africa?
PwC's Nigeria summary lists 7.5% on interest under the South Africa treaty, against 10% domestically.
Where do I declare Nigerian interest on eFiling?
As foreign interest on your ITR12, using the gross amount, with the foreign tax credit claimed separately.
Sources
- SARS: Interest and dividends, tax rates (last updated 19 Aug 2026) · accessed Oct 2026
- SARS: Interpretation Note 18 (Issue 5), rebate and deduction for foreign taxes on income (9 Dec 2022) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (reviewed 29 May 2026) · 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.