Nigerian banks have clarified that a 10% withholding tax is now being deducted from interest earned on foreign currency savings accounts, including dollar, pound, and euro accounts. This follows customer complaints about lower-than-expected interest payments, as reported by The Sun.
Tax Deduction Details
The deduction is based on the Nigeria Tax Act 2025, effective January 1, 2026, and applies to interest on foreign currency accounts held by customers. Under this law, interest on domiciliary accounts is now taxed similarly to naira savings interest.
Financial institutions, including Access Bank, have informed customers that the tax is automatically deducted at the point interest is paid. They emphasize that this is a government-mandated withholding tax, not a bank charge.
Access Bank clarified: "A 10% withholding tax now applies to interest earned on foreign currency deposits and is deducted at the time the interest is paid, effective January 1, 2026, as required by the new Nigeria Tax Act 2025. Interest on Federal and State Government Bonds remain exempt."
For example, if a customer earns $100 as interest, $10 will be deducted as tax, leaving the customer with $90. The deducted amount is forwarded to the relevant tax authorities.
To reduce confusion, banks have enhanced communication through emails, text messages, and app notifications to explain how the deduction works.
Implications for Savers and Investors
Experts say the move is unlikely to significantly change how people use foreign currency accounts, as many Nigerians keep such funds mainly to protect against exchange rate fluctuations rather than to earn high returns. However, some investors may explore options like Eurobonds or money market instruments for better returns. Interest on federal and state government bonds remains exempt from this tax.
Overall, banks focus on compliance and keeping customers informed, as the new tax becomes a regular part of account statements.
CBN Scraps Card Maintenance Fees
In related news, the Central Bank of Nigeria (CBN) has scrapped card maintenance fees, benefiting millions of banking customers. According to the CBN, banks are no longer allowed to charge maintenance fees on naira-denominated debit and credit cards. However, the cost of issuing or replacing debit and credit cards has increased from N1,000 to N1,500.
