The Nigeria Revenue Service (NRS) has assured Nigerians that the new tax laws do not authorise banks to make arbitrary deductions from customers’ personal accounts, amid growing concerns over the implementation of the tax reforms.
The Service also clarified that the standard Value Added Tax (VAT) rate remains 7.5 per cent, urging individuals, traders and business owners to disregard misinformation about the new tax regime.
The NRS Tax Administrator overseeing Kano, Jigawa and Katsina states, Samaila Abdullahi, gave the assurances at a tax reform sensitisation programme in Kano, where he addressed concerns about bank transactions, personal loans, family transfers and the taxation of business income.
Abdullahi explained that the new tax laws prescribe procedures for tax assessment, collection and recovery, stressing that financial institutions could not rely on the reforms to make unauthorised deductions from customers’ accounts.
He acknowledged that the changes had generated anxiety among taxpayers, particularly individuals and small business owners who feared that ordinary financial transactions could attract additional tax liabilities.
According to him, much of the apprehension stemmed from misconceptions about the provisions of the new laws and inadequate public awareness of taxpayers’ rights and obligations.
He urged Nigerians to seek clarification from the appropriate authorities rather than rely on rumours and unverified information.
Loans, Transfers Not Automatically Taxable
Abdullahi also clarified that money received as a loan should not automatically be classified as business income or profit, provided the transaction is properly documented.
“For instance, when a trader receives a loan of ₦500,000, the amount should not automatically be treated as ₦500,000 in sales or profit, provided the transaction is properly documented,” Abdullahi explained.
He said maintaining accurate financial records would help taxpayers distinguish between borrowed funds, personal transfers, business turnover and taxable profits during tax assessments.
The tax administrator added that proper documentation would also help prevent disputes between taxpayers and revenue authorities.
He maintained that the reforms were designed to improve transparency, strengthen compliance and establish clearer guidelines for tax administration, rather than expose Nigerians to arbitrary deductions.
On the implications for small businesses, Abdullahi acknowledged concerns about the potential tax burden on traders and small-scale entrepreneurs.
He stressed the need for sustained public enlightenment to help business owners understand their tax obligations, applicable reliefs and record-keeping requirements under the new regime.
NRS Clarifies VAT on Bank Charges
The NRS has also previously clarified that the 7.5 per cent VAT charged on banking services was not introduced by the new tax laws.
In January 2026, the Service explained that VAT applied to fees, commissions and service charges imposed by banks, rather than the actual amounts transferred or withdrawn by customers.
For instance, where a bank charges a customer ₦10 for a transfer, the applicable VAT is calculated on the ₦10 service charge, not the amount transferred.
The clarification followed concerns over banks’ plans to collect VAT on certain electronic banking services, including transfer charges. The Service maintained that the tax on banking charges was an existing obligation, not a new levy created by the reforms.
Tax Authority Seeks Voluntary Compliance
Meanwhile, a resource person at the Kano engagement, Abba Sani, presented a paper titled Overview of Nigeria’s Tax Reforms and Implications for Taxpayers, outlining measures to improve public understanding of the new tax framework.
Sani said the sensitisation programme focused on three key areas: explaining the provisions of the new tax laws, promoting voluntary compliance and addressing challenges confronting taxpayers.
He said the first component examined tax obligations affecting individuals, companies and businesses, including VAT and other applicable levies.
The second component, titled From Obligation to Voluntary Compliance: A Practical Guide for Taxpayers, was designed to provide practical guidance on tax registration, record-keeping, transaction reconciliation, filing returns and payment procedures.
The third component, Closing the Compliance Gap: Taxpayer Challenges, Service Delivery and Practical Solutions, focused on identifying obstacles to compliance and developing measures to address them.
Sani urged taxpayers to report difficulties encountered during registration, digital tax processes, filing procedures and interactions with revenue officials.
He said feedback from taxpayers would help the Service identify operational gaps, improve service delivery and address conflicting interpretations of tax obligations.
The resource person stressed that effective tax administration required cooperation between revenue authorities and taxpayers.
He said the NRS was responsible for providing accurate information, ensuring consistent treatment and making support services accessible, while taxpayers were expected to maintain proper financial records, provide accurate information and meet their statutory obligations within stipulated deadlines.
The Service reiterated its commitment to sustained taxpayer education and stakeholder engagement to improve understanding of the reforms and encourage voluntary compliance.
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