Federal Government has ordered all Nigerian banks to Flag Accounts with Monthly Transactions Over ₦5 million
Naijaonpoint Media reports that Nigerian commercial banks will now be required to report all customer accounts with monthly transactions exceeding N5 million to the Federal Inland Revenue Service (FIRS) and other relevant tax agencies. The directive, announced by the National Orientation Agency (NOA), forms a key part of the 2025 Tax Reform Act recently signed into law.
Outlined in Section 30 of the new Act, this mandate is designed to improve financial transparency, curb tax evasion, and align Nigeria’s tax system with international standards. According to the NOA, the reform signals a stronger commitment to ensuring that taxable income, especially among high-net-worth individuals and informal sector players, does not escape regulatory oversight.
Analysts believe this move could significantly enhance the government’s ability to track undeclared earnings and boost revenue collection, especially from segments of the economy previously overlooked.
Beyond mandatory transaction reporting, the Act introduces several provisions aimed at easing the tax burden on low- and middle-income Nigerians. Individuals earning up to N800,000 annually—or N66,667 monthly—will now be exempt from personal income tax, raising the threshold from the previous N500,000. This adjustment is intended to offer greater protection for low-income earners and provide relief amid rising living costs.
Section 31 of the Act exempts capital gains made from the sale of a primary residence, while Section 50 excludes up to N10 million in compensation from tax in cases of injury, job loss, or defamation. These provisions offer broader financial security for vulnerable individuals.
A new value-added tax (VAT) distribution formula will also take effect in 2026, restructuring how VAT revenue is shared among the federal, state, and local governments. Under the revised structure, the Federal Government’s share drops from 15 to 10 percent. States will now receive 55 percent—up from 50 percent—shared based on 50 percent equally, 20 percent by population, and 30 percent by consumption. Local Governments retain their existing 35 percent share.
This adjustment is seen as a strategic incentive for states with high consumption levels, such as Lagos and Rivers, to enhance internal revenue generation and promote local economic development.
Experts have described the reforms as a major shift in Nigeria’s tax administration strategy, with transparency, fairness, and economic activity now central to national revenue planning. While many praise the efforts to expand the tax base without burdening the poor, privacy advocates and some financial institutions have raised concerns. They are calling for the establishment of clear protocols to protect customer data and prevent misuse of the reporting system.
With implementation set to begin in 2026, attention will now turn to how the reforms affect tax compliance, revenue growth, and spending behavior across the country.