As an investor, it’s crucial to understand the tax implications of any investment opportunities you get involved with. So, today, we’re going to be answering the question “Are Savings accounts taxed?” and giving you key details to help you understand the tax implications of your savings.
Tax on savings in Nigeria
In Nigeria, your interest earned on every savings account is subject to a maximum of 10% withholding tax. (WHT).
This means that if you were to invest in our Fixed Savings product, our regular Renmoney savings account, or even our daily-interest-earning RenFlex, the sum of 10% of the interest earned, or in the government’s case, “Income earned” would be deducted as tax and paid to the Federal Inland Revenue Service (FIRS) on your behalf before you can receive it.
Now, don’t worry – this Withholding tax does not apply to your principal amount in savings or a current account or the deposit you make into the bank, so you can have some peace of mind, knowing that your money is growing.
Tax is only applicable to interest earned
important to note that the withholding tax is only applicable to the interest earned on savings accounts, and not on the principal amount or deposits made into the savings account. The withholding tax is deducted at the source by the bank before the interest is credited to your account, so you will receive the net interest after the withholding tax has been deducted.
Is there any way to have a tax-free savings account, or get saving account exemptions? Unless you’re 65 or older, the CBN mandates that your interest earned on savings accounts be taxed with a Withholding charge of 10% on your interest.
For more information on the government’s stance on tax on savings accounts, you can read this article.
And for even more interesting news, you should know that we’re offering up to 18% off our Fixed Savings product to wipe every tax tear from your eye. You only need a minimum of ₦1,000 to click here and earn great interest.