Nigerian tax experts have moved swiftly to correct widespread misinformation, confirming that the country's new tax laws do not impose a levy on money sitting in bank accounts. The clarification comes amid public anxiety over the implementation of the Nigeria Tax Act, 2025.
Stamp Duty Applies to Transfers, Not Account Balances
Mr. Ben Enamudu, Chairman of the Chartered Institute of Taxation of Nigeria (CITN), Abuja District, provided definitive clarity during a recent interview on ARISE News. He stressed that a false narrative had taken root, causing unnecessary worry among bank customers.
"There is a wrong narrative out there that the money in your bank account will be taxed. There is no provision for that in our tax laws. Nobody taxes the money sitting in your bank account," Enamudu stated emphatically.
He explained that the frequently discussed ₦50 charge is a stamp duty applied specifically to qualifying electronic transfers. "When you make a transfer from your account to another person, a ₦50 stamp duty applies," he said. However, a key exemption exists: transfers between accounts held within the same bank are not subject to the fee. The duty is triggered only when funds move from one financial institution to another, even if the sender and recipient are the same person.
New Rules on Payment, Exemptions, and Additional Reliefs
A significant shift in the reformed law concerns who bears the cost. Previously, both the sender and receiver shared the burden. Under the new law, only the sender is responsible for paying the ₦50 stamp duty.
The law also outlines clear exemptions. Salary payments and transactions involving salary accounts do not attract the duty. Furthermore, electronic transfers below ₦10,000 are fully exempt. The ₦50 charge applies only once a single transfer reaches or exceeds the ₦10,000 threshold.
Beyond stamp duty, Enamudu clarified that the Value Added Tax (VAT) regime continues to protect essential goods and services. "You don’t pay VAT on basic food items, medical services, pharmaceuticals, education and other essentials," he confirmed.
A notable introduction in the new tax framework is relief for tenants. Individuals can now claim a rent relief equivalent to 20% of the annual rent paid, capped at ₦500,000 per year. For example, a tenant paying ₦3 million in rent would calculate relief of ₦600,000, but would only receive the capped amount of ₦500,000. A tenant paying ₦1 million would receive ₦200,000 in relief.
Understanding Taxable Income and Implementation
Addressing confusion around income thresholds, Enamudu explained that the often-cited ₦800,000 figure refers to taxable income, not gross earnings. Statutory deductions—including pension contributions, National Health Insurance Scheme (NHIS) payments, National Housing Fund subscriptions, and insurance premiums—are removed before arriving at the taxable income figure.
Nigeria's self-assessment system remains in place. While employers handle Pay-As-You-Earn (PAYE) for formal employment income, individuals with additional earnings from rent, business, or other streams must declare these themselves.
Enamudu described the overarching philosophy of the new law as "heavily pro-poor," designed to tax economic gains rather than capital. "Government wants to tax the fruit, not the seed," he analogized. The law officially took effect on January 4, 2026, and is currently in a transitional implementation phase. The administration of President Bola Tinubu has consistently framed these reforms as aiming for fairness, harmonization, and long-term fiscal stability, not simply higher taxes.
In a related development under the new tax regime, Nigerian banks have begun implementing a 10% withholding tax on interest earned from foreign currency deposits. This change, effective from January 1, 2026, applies to interest on dollar and other foreign currency accounts. Major financial institutions including Access Bank, Zenith Bank, and United Bank for Africa (UBA) have notified their customers of this deduction, which is rooted in the provisions of the Nigeria Tax Act, 2025.
