The Chairman of the Chartered Institute of Taxation of Nigeria, Abuja District, Ben Enamudu, has moved to dispel widespread misinformation surrounding Nigeria’s new tax regime, insisting that bank balances are not subject to taxation and that only specific electronic transfers attract a ₦50 stamp duty under the reformed system.
Speaking during an interview with ARISE News on Tuesday, Enamudu said the reforms have been deliberately structured to protect low-income earners and vulnerable Nigerians, contrary to popular narratives that have generated anxiety across the country.
“The narrative out there, which is the wrong narrative, is that the money in your bank account will be taxed. There is no provision for that in our tax laws. Nobody taxes the money in your bank account,” Enamudu said.
The taxation expert explained that the charge applicable to electronic transfers is a stamp duty, not a tax on deposits or account balances, and clarified the conditions under which the duty applies.
“When you make transfers from your account to someone else, there is a ₦50 stamp duty that applies. However, if you maintain multiple accounts within the same bank, you are not expected to pay the stamp duty,” he said.
Enamudu further noted that the reform has altered the burden-sharing arrangement for stamp duty payments, shifting responsibility entirely to the sender.
“Before now, both the sender and the receiver bore the burden of the stamp duty. But with the new tax reform, only the sender pays,” he said.
He outlined several categories of transactions that are exempt from the charge, including salary-related payments and small-value transfers.
“Salary accounts and payment of salaries are exempted from stamp duty. Transfers below ₦10,000 are also exempted. Once it hits ₦10,000, you pay the ₦50 charge,” Enamudu said.
However, he clarified that transfers between personal accounts held in different banks still attract stamp duty, even when the sender and receiver are the same individual.
“Once it crosses one financial institution to another, the stamp duty is triggered, even if it is your own account,” he said.
The taxation chairman also addressed concerns about value-added tax, emphasising that essential goods and services remain exempt under the new regime.
“You don’t pay VAT on basic food items, medicals, pharmaceuticals, education and other essentials,” he said.
On housing, Enamudu highlighted a rent relief provision introduced under the reforms, which allows tenants to claim a percentage of their annual rent as a deduction.
“If you pay rent as a tenant, you are allowed a relief of 20 per cent of the rent paid, subject to a maximum of ₦500,000,” he said.
Using practical examples, he illustrated how the cap operates in different scenarios.
“If your rent is ₦3 million annually, 20 per cent is ₦600,000, but the relief is capped at ₦500,000. If your rent is ₦1 million, then your relief is ₦200,000,” he said.
Turning to compliance mechanisms, Enamudu explained that Nigeria operates a self-assessment system for tax clearance, which places the responsibility on individuals to voluntarily declare their income.
“The law envisages that you will come forward voluntarily and declare your income,” he said.
While employers remit Pay-As-You-Earn for workers, he noted that individuals with additional income streams beyond their salaries must file returns themselves and aggregate all sources of earnings.
“Your salary income is just one line. If you earn rent or run a business, all incomes must be aggregated and declared,” he said.
For operators in the informal sector, such as market traders, Enamudu said state governments would adopt presumptive taxation structures tailored to the realities of their businesses.
“Market women fall under the informal sector. States will determine structures and modalities, considering the principle of economy,” he said.
Addressing broader concerns about the impact of the reforms on ordinary Nigerians, Enamudu described the new tax law as deliberately designed to protect vulnerable earners and shield those at the bottom of the income ladder.
“The tax act as passed is heavily pro-poor. That is actually the reality of the act,” he said.
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He clarified widespread confusion about the often-cited ₦800,000 threshold, emphasising that the figure refers to taxable income rather than total earnings.
“The narrative out there also needs correction. It is not that if you earn ₦800,000, you don’t pay tax. The law says if your taxable income is ₦800,000 and below,” he said.
Enamudu explained that statutory deductions are applied before taxable income is determined, meaning many earners may fall below the threshold even if their gross earnings exceed ₦800,000.
“Contributions to PENCOM, NHIS, National Housing Fund, interest on owner-occupied properties, and insurance premiums for yourself and your spouse are deducted. After all these deductions, if your income is still not above ₦800,000, you will not pay tax,” he said.
He argued that the framework provides substantial relief for low-income earners and those operating in the informal sector, reflecting the government’s intention to tax wealth creation rather than stifle it.
“It gives a lot of protection for low-income earners. Government wants to tax the fruit and not the seed,” he said.
Enamudu confirmed that the law is already operational, having taken effect on January 4, 2026, although the current period is being treated as transitional to allow for adjustments and public education.
“The act became active on the 4th of January 2026. We are already at the implementation stage, though this is a transitional period,” he said.
He expressed confidence that greater efficiency in tax administration would expand the tax base over time, ultimately increasing government revenue without imposing heavier burdens on individual taxpayers.
“When efficiency comes into the tax environment, more people and businesses are captured. Over time, revenue will grow, and the government will be able to meet its obligations. Government is doing a lot, but there is still room for more,” he said.
The taxation expert’s remarks come amid heightened public debate over Nigeria’s tax reforms, which have been the subject of intense scrutiny and mixed reactions since they were enacted.
President Bola Tinubu confirmed the implementation of the new tax laws, including those enacted on June 26, 2025, and others scheduled to commence on January 1, 2026, would proceed as planned.
The President described the reforms as “a once-in-a-generation opportunity to build a fair, competitive, and robust fiscal foundation” for the country, clarifying that the laws are not intended to raise taxes but to support a structural reset, promote harmonisation, and protect dignity while strengthening the social contract.
Nigeria’s tax system has long been criticised for its narrow base, heavy reliance on oil revenues, and inefficiencies in collection mechanisms. The new reforms represent the government’s most comprehensive attempt in decades to overhaul the system, broaden the tax base, and reduce the country’s dependence on crude oil revenues, which have been volatile and increasingly unreliable.
The reforms also seek to address longstanding issues of multiple taxation, where businesses and individuals are subjected to overlapping levies by federal, state, and local governments, often without clear legal frameworks or accountability. By harmonising tax structures and clarifying responsibilities, the government hopes to create a more predictable and business-friendly environment.
However, the rollout of the reforms has been accompanied by widespread confusion and concern, particularly among Nigerians who fear that the changes will impose additional financial burdens on households already grappling with high inflation, rising cost of living, and economic uncertainty. The misunderstanding around bank balance taxation and electronic transfer charges has been particularly pronounced, fuelled by social media speculation and incomplete information.
Tax experts and government officials have repeatedly sought to clarify the provisions of the new laws, but public scepticism remains high, reflecting deeper anxieties about the direction of economic policy under the current administration. The government’s ability to effectively communicate the benefits of the reforms and address legitimate concerns will be critical to their success.
For low-income earners, informal sector operators, and small businesses, the reforms represent both an opportunity and a challenge. On one hand, the exemptions, reliefs, and higher thresholds provide meaningful protection and reduce the tax burden for millions of Nigerians. On the other hand, the transition to a more structured and efficient tax system will require greater compliance and transparency, which may be unfamiliar or difficult for those who have operated outside formal tax frameworks.
