Categories: Business

Inter-bank rates to move in mixed directions amid marginal inflow of matured bills

THERE are expectations in the money market that inter-bank rates will move in mixed directions amid marginal inflow of matured bills.

In the new week, dealers said Open Market Operation (OMO) worth N30 billion would mature via the secondary market and that Nigerian Treasury Bills (NTB) worth of N25.94 billion would mature this week.

Meanwhile, Nigerian banks have notified their customers that tax would now be charged on bonds and short-term securities on which tax is due, effective from January 2, 2022.

This followed the expiration of the Federal Government Finance Order 2011 which exempted bonds and short-term government securities from income tax for 10 years between 2011 and 2021.

One of the banks, Fidelity Bank, disclosed this in a notice to its customers on Wednesday, titled, ‘Government tax waiver on bonds expires.’

On December 9, 2011, President Goodluck Jonathan signed the Companies Income Tax Exemption Order 2011, which introduced tax exemption on T-bills and promissory notes, government and corporate bonds, and the interest earned on these instruments for a period of 10 years, starting from January 2, 2012.

Taxes would be charged on short-term Federal Government of Nigeria securities, such as Treasury Bills and promissory notes; bonds issued by state and local governments and their agencies; bonds issued by corporate bodies including supra-nationals; and interest earned by holders of the bond and securities, the bank said.

“For clarity, please note that the two taxes due on income earned on investment (including that of short-term securities) are: Withholding Tax – a 10 per cent charge that is deducted at source and is applicable to both individuals and companies income tax – applicable to only companies at 30 per cent,” it said.

According to the bank, bonds issued by the Federal Government remained exempted from this regime as this was hitherto not taxable, and all investments in non-FG bonds, Treasury Bills, promissory notes and other short-term government securities shall now attract 10 per cent deduction at source at maturity (withholding tax on interest).

“This is payable to the relevant tax authority in accordance with applicable tax laws for Personal Income Tax (for individuals) and Company Income Tax (for companies),” it said.

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