Is interest income on treasury bills taxable in Nigeria? Mostly, yes. Nigeria's Tax Appeal Tribunal ruled this month that a company owes roughly N2.03 billion in company income tax and education tax after treating interest earned on treasury bills, bonds and fixed deposits as automatically exempt. Only interest that can be traced to specific qualifying government securities escapes tax, and that is a much narrower rule than many finance teams assume.
The case involved the Cement Technology Institute of Nigeria, a company limited by guarantee that holds treasury bills, bonds and fixed deposits, and pays the Bank of Industry a fee to manage them. The Nigeria Revenue Service assessed additional company income tax, tertiary education tax and withholding tax for the 2018 to 2020 years of assessment. CTIN appealed, arguing its investment interest should not have been taxed at all. The tribunal disagreed on the main point, though it corrected some detail in the institute's favour.
What did the tribunal actually decide?
Sitting in Abuja under Appeal No. TAT/ABJ/332/2023, a five member panel chaired by Chief Moremi Soyinka-Onijala reviewed CTIN's investment portfolio and its arrangement with the Bank of Industry. It accepted the management fee CTIN paid to the Bank of Industry as a deductible expense, and credited withholding tax already deducted at source. On the central question, it sided with the Nigeria Revenue Service: interest income is taxable profit, not a category that sits outside the tax net simply because it comes from government paper.
Where CTIN did win ground was narrower and more technical. The tribunal ordered the Nigeria Revenue Service to recompute the assessment within 30 days to reflect the exemption in the Companies Income Tax (Exemption of Bonds and Short Term Government Securities) Order, 2011, but only for interest CTIN can specifically trace to qualifying federal government treasury bills and bonds. The final numbers as they stand: N1,835,484,959.69 in company income tax and N190,158,410.44 in tertiary education tax, a combined N2,025,643,370.13. That figure may fall once the recomputation is done, but it will not disappear.
Why do so many Nigerian companies get this wrong?
The confusion usually starts from a true fact stretched too far. The 2011 Order does exempt interest on qualifying federal government bonds and short term securities such as treasury bills. What gets lost is the word specifically: the exemption covers interest a taxpayer can trace to a named qualifying instrument, not every naira in an account that happens to hold some treasury bills alongside fixed deposits and other placements. Fixed deposit interest with a commercial bank is not covered at all, however government-adjacent the investment feels.
There is a second layer of confusion specific to organisations like CTIN. Being a company limited by guarantee, or running as a not-for-profit institute, does not shield investment income. Nigerian tax law taxes profit, and interest on invested funds is profit, whatever the entity's mission. Professional institutes, trade associations and NGOs holding treasury bills, bonds or fixed deposits as part of their reserves face exactly the same exposure CTIN did.
What is actually exempt, and what is not?
- Exempt: interest specifically traceable to Federal Government of Nigeria bonds and short term securities such as treasury bills, held directly and documented as such, under the 2011 Order.
- Not exempt: interest on fixed deposit placements with commercial banks, even where the underlying funds ultimately sit in government paper.
- Not exempt by default: interest income earned by a company limited by guarantee, professional institute, or NGO, simply because of its legal form or mission.
- Deductible: fees paid to a licensed fund manager or institution, such as the Bank of Industry in this case, for managing the portfolio that generates the interest.
- Creditable: withholding tax already deducted at source on interest paid, which reduces the final liability rather than being lost.
What does this mean for your business?
- Trace every exemption claim to a specific instrument. If interest income is being reported as exempt, be ready to show which treasury bill or bond certificate it came from, not just that the portfolio includes government securities.
- Separate fixed deposits from treasury bills and bonds in your records. Lumping all interest-bearing placements into one investment income line is exactly what invites a full assessment instead of a partial one.
- Do not assume nonprofit status protects investment income. A company limited by guarantee, trade body or NGO earning interest on its reserves should budget for company income tax on that interest unless it can prove the exemption applies, instrument by instrument.
- Treat a tribunal recompute order as a partial win, not a discount. CTIN still owes tax on the bulk of its interest income; only the portion tied to qualifying securities gets recalculated.
The tertiary education tax at issue here has since been folded into the 4% development levy from the 2026 tax year; our guide on who pays Nigeria's development levy explains how that consolidation works. The same discipline that protects a company at appeal, matching your own computation before you submit, is what we set out in our guide to filing Company Income Tax in Nigeria on Rev360.
FAQ
Is interest earned on Nigerian treasury bills always tax free? No. Interest is only exempt where a company can trace it to a qualifying Federal Government of Nigeria bond or short term security under the Companies Income Tax (Exemption of Bonds and Short Term Government Securities) Order, 2011. Interest on fixed deposits and other placements remains taxable company income.
Does being a company limited by guarantee or an NGO exempt investment income from tax in Nigeria? No. Legal form and mission do not exempt an organisation from company income tax on interest, dividends or other investment profit. The Cement Technology Institute of Nigeria, a company limited by guarantee, was assessed and largely upheld on exactly this basis.
What can a business do if the Nigeria Revenue Service assesses tax on investment income it believes is exempt? Appeal to the Tax Appeal Tribunal within the statutory window, with documentary evidence tracing each interest amount to the specific instrument that earns the exemption. A general claim that the portfolio includes government securities is not enough; the tribunal required proof tied to named treasury bills and bonds.
If your business, institute or NGO holds treasury bills, bonds or fixed deposits and you are not sure which interest income actually qualifies for exemption, that uncertainty is exactly what NRS assessments and tribunal disputes are made of. VOG Global Consult helps Nigerian organisations review their investment income treatment and respond to NRS assessments before they become tribunal appeals. To book a review, contact VOG Global at Suite 060 to 061, Orago Complex, Area 10, Garki, Abuja.