Bank Balances Untaxed as N50 Transfer Charge Stands

The Chartered Institute of Taxation of Nigeria (CITN) has clarified that bank account balances are not subject to taxation under Nigeria’s newly implemented tax regime, stressing that only certain electronic transfers attract a statutory ₦50 stamp duty.

The clarification was given on Tuesday by the Chairman of the CITN Abuja District, Mr. Ben Enamudu, during an interview on ARISE News, amid growing public concern and widespread misinformation surrounding the scope and impact of the new tax reforms.

Enamudu dismissed claims that funds held in personal or corporate bank accounts would be taxed, describing such assertions as false and unsupported by existing tax laws.

“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 explained that what applies to eligible electronic transactions is a stamp duty charge, not a tax on deposits or balances. Under the law, a flat ₦50 stamp duty is charged on electronic transfers of ₦10,000 and above.

According to him, the duty applies when funds are transferred from one account to another, particularly when the transaction crosses from one financial institution to another.

However, transfers between multiple accounts held by the same individual within the same bank are exempt.

“When you make transfers from your account to someone else, there is a ₦50 stamp duty that applies. If you maintain multiple accounts within the same bank, you are not expected to pay the stamp duty,” Enamudu said.

He further noted a significant change introduced by the reforms regarding who bears the cost of the duty.

Previously, both sender and receiver shared the burden, but under the new framework, only the sender pays.

Several categories of transactions, he added, remain exempt. Salary accounts and salary payments do not attract stamp duty, and transfers below ₦10,000 are excluded.

Nonetheless, transfers between personal accounts held in different banks still trigger the charge once they cross institutional boundaries.

Beyond bank transfers, Enamudu said the reforms preserve exemptions on essential goods and services under the Value Added Tax (VAT) system.

Basic food items, medical services, pharmaceuticals, education and other essentials remain VAT-free.

He also highlighted a rent relief provision designed to ease housing costs for tenants.

Under the new law, tenants are entitled to a tax relief of 20 per cent of rent paid, subject to a maximum of ₦500,000 annually.

Explaining the application of the relief, Enamudu said a tenant paying ₦3 million annually would be eligible for ₦600,000 in relief but would be capped at ₦500,000, while someone paying ₦1 million would receive ₦200,000.

On compliance, he said Nigeria operates a self-assessment tax system, requiring individuals to voluntarily declare their incomes.

While employers continue to remit Pay-As-You-Earn (PAYE) for salaried workers, individuals with additional income streams such as rent or business earnings must aggregate and declare all income sources.

He added that States would adopt presumptive taxation for informal sector operators, including market traders, using structures designed to be economical and practical.

Addressing broader concerns, Enamudu described the new tax law as strongly protective of low-income earners.

He clarified that the widely referenced ₦800,000 threshold applies to taxable income after statutory deductions, not total earnings.

Deductions, he said, include Pension Contributions, National Health Insurance Scheme payments, National Housing Fund contributions, Insurance Premiums for individuals and their spouses, and interest on owner-occupied properties.

“If after all these deductions your taxable income is still not above ₦800,000, then you will not pay tax,” he said, adding that the objective is to “tax the fruit and not the seed.”

Enamudu confirmed that the new tax law took effect on January 4, 2026, noting that implementation is currently in a transitional phase aimed at improving efficiency and expanding the tax base.

Earlier, President Bola Ahmed Tinubu reaffirmed that the implementation of the new tax laws, including those enacted in June 2025 and others commencing in January 2026, would proceed as planned.

The President described the reforms as a once-in-a-generation opportunity to build a fair, competitive and sustainable fiscal foundation for Nigeria.