The Federal Government has assured Nigerians that banks and other financial institutions are not authorised to arbitrarily deduct taxes from customers’ personal accounts, insisting that the Value Added Tax, VAT, rate remains 7.5 percent.
The clarification was given by the Nigeria Revenue Service, NRS, amid growing anxiety among individuals, traders and business owners over the new tax laws and their implications for bank transactions, personal loans, family transfers and business income.
Speaking at a stakeholders’ engagement and tax reform sensitisation programme in Kano, the NRS Tax Administrator for Kano, Jigawa and Katsina states, Samaila Abdullahi, said the reforms provide clear legal procedures for tax assessment, collection and recovery.
Abdullahi stressed that the new framework does not give financial institutions powers to make indiscriminate deductions from accounts, adding that all tax collection must follow due process and comply with the law.
He blamed much of the public anxiety on misconceptions and poor understanding of the reforms, urging Nigerians to rely on official information.
On loans, the tax administrator clarified that personal or business loans should not automatically be treated as taxable income if properly documented.
“For instance, when a trader receives a loan of N500,000, the amount should not automatically be treated as N500,000 in sales or profit, provided the transaction is properly documented,” he explained.
He said keeping accurate financial records will help taxpayers distinguish between loans, personal transfers, business turnover and taxable profits, thereby avoiding wrong assessments.
According to him, the new tax regime is designed to promote transparency, strengthen compliance and provide clearer guidelines, not to expose citizens to arbitrary deductions.
On small businesses, Abdullahi acknowledged concerns about tax burden on traders and SMEs and emphasised the need for sustained public enlightenment on obligations, reliefs and record-keeping requirements.
Also speaking, a resource person, Abba Sani, said the NRS is committed to simplifying tax administration and encouraging voluntary compliance.
Sani, who presented a paper titled “Overview of Nigeria’s Tax Reforms and Implications for Taxpayers,” said the sensitisation was built around three key areas.
He listed them as: provisions of the new tax laws affecting individuals and businesses including VAT rate; practical guide for taxpayers on registration, record-keeping, reconciliation, filing and payment; and closing the compliance gap by identifying challenges and providing solutions.
He urged taxpayers to report difficulties with registration, digital processes, filing and engagement with officials, noting that feedback would help improve service delivery.
Sani added that effective implementation requires cooperation, with NRS providing accurate information and accessible support, while taxpayers maintain proper records and meet obligations within deadlines.
