Amid growing public concern over Nigeria’s recently introduced tax reforms, the Chartered Institute of Taxation of Nigeria (CITN), Abuja District, has moved to clarify how the changes apply to bank transactions, income thresholds, and exemptions.
Speaking during an interview on ARISE News on Tuesday, the district chairman, Ben Enamudu, stated that the reforms do not impose taxes on money held in bank accounts, explaining that only specific electronic transfers attract a flat ₦50 stamp duty. He said confusion surrounding the policy had fuelled inaccurate interpretations of the law.
According to Enamudu, the applicable charge on transfers is a stamp duty rather than a tax on deposits or account balances. He explained that the ₦50 duty applies when funds are transferred from one account to another, while transfers between multiple accounts held by the same individual within one bank are exempt.
He added that the reforms altered responsibility for the charge, noting that while both sender and receiver previously bore the cost, only the sender is now required to pay under the new framework. Enamudu further stated that transfers below ₦10,000 are exempt, as are salary payments and salary accounts. However, transfers between personal accounts across different banks still attract the stamp duty.
Beyond electronic transfers, Enamudu said the reforms preserve exemptions on value-added tax for essential goods and services, including basic food items, medical services, pharmaceuticals, and education. He also highlighted a new tax relief for tenants, allowing a deduction of 20 per cent of annual rent paid, capped at ₦500,000.
He explained that under the provision, a tenant paying ₦3 million annually would qualify for a maximum relief of ₦500,000, while someone paying ₦1 million would be entitled to a ₦200,000 deduction.
On tax compliance, Enamudu said Nigeria operates a self-assessment system, requiring individuals to voluntarily declare their income. While employers remit Pay-As-You-Earn (PAYE) on behalf of workers, he noted that individuals earning income from other sources such as rent or business activities are expected to file comprehensive returns covering all income streams.
He also said state governments would rely on presumptive taxation for operators in the informal sector, including market traders, with states determining appropriate collection structures based on efficiency and cost considerations.
Addressing concerns about income thresholds, Enamudu clarified that the ₦800,000 benchmark under the law refers to taxable income rather than gross earnings. He explained that statutory deductions—including pension contributions, health insurance, housing fund contributions, insurance premiums, and interest on owner-occupied properties—are applied before determining taxable income.
He said individuals whose taxable income remains at ₦800,000 or below after these deductions are not liable to pay income tax. According to him, the structure is intended to protect low-income earners and accommodate informal sector participants.
Enamudu confirmed that the new tax law came into effect on January 4, 2026, adding that implementation is currently in a transitional phase. He said improved efficiency in tax administration is expected to gradually expand the tax base and increase government revenue over time.
