No tax on bank balances, only transfers attract N50, CITN clarifies

The Chairman of the Chartered Institute of Taxation of Nigeria (CITN), Abuja District, Ben Enamudu, has dismissed claims that bank balances are taxed under Nigeria’s new tax regime.

He stated that only certain electronic transfers are subject to a ₦50 stamp duty and that the reforms aim to protect low-income earners.

In an interview with ARISE News on Tuesday, Enamudu stated that disinformation about the reforms, particularly around bank transfers and income levels, has generated unnecessary alarm among Nigerians.

“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,” he said.

He emphasized that the charge for electronic transfers is a stamp duty, not a tax on deposits or account balances.

“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,” Enamudu said.

According to Enamudu, the reform also changes who bears the cost of the duty.

“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.

Enamudu said several transactions are exempt from the charge.

“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,” he said.

He also stated that transfers between personal accounts held in different banks still attract stamp duty.

“Once it crosses from one financial institution to another, the stamp duty is triggered, even if it is your own account,” he said.

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Enamudu also mentioned that essential goods and services remain exempt from value-added tax.

“You don’t pay VAT on basic food items, medicals, pharmaceuticals, education, and other essentials,” he said.

Speaking on housing, he highlighted a rent relief introduced under the reforms.

“If you pay rent as a tenant, you are allowed a relief of 20 percent of the rent paid, subject to a maximum of ₦500,000,” he said.

Explaining the cap with examples, he said, “If your rent is ₦3 million annually, 20 percent 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.

Speaking on compliance, Enamudu said the country operates a self-assessment system for tax clearance.

“The law envisages that you will come forward voluntarily and declare your income,” he said.

While employers remit PAYE for their employees, he stated that those with additional sources of income must file their own taxes.

“Your salary income is just one line. If you earn rent or run a business, all incomes must be aggregated and declared,” he said.

He added that states would adopt presumptive taxation for informal operators such as market women.

“Market women fall under the informal sector. States will determine structures and modalities, considering the principle of economy,” he said.

Speaking on concerns about the impact of the reforms, Enamudu described the new tax law as protective of vulnerable earners.

“The tax act as passed is heavily pro-poor. That is actually the reality of the act,” he said.

He stated that the often-cited ₦800,000 figure refers to taxable income, not 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 stressed that statutory deductions are applied before taxable income is determined.

“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 mentioned that the framework provides relief for low-income earners and those in the informal sector.

“It gives a lot of protection for low-income earners. The government wants to tax the fruit and not the seed,” he said.

Enamudu confirmed that the law is already in effect.

“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 stated that greater efficiency would expand the tax base over time.

“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.”

President Bola Tinubu said 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 said the reforms represent “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 harmonization, and protect dignity while strengthening the social contract.