The Chartered Institute of Taxation of Nigeria (CITN) has dismissed claims that bank balances are taxable under Nigeria’s new tax regime, saying only certain electronic transfers attract a N50 stamp duty and that the reforms are designed to shield low-income earners.
The Chairman of the taxation body for Abuja District, Mr Ben Enamudu, made this known while speaking in an interview with Arise News on Tuesday as part of efforts to educate and correct misconceptions around the new regulations.
Mr Enamudu said misinformation about the reforms, particularly around bank transfers and income thresholds, has caused panic 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 on the programme, explaining that the charge applicable to 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 N50 stamp duty that applies. However, if you maintain multiple accounts within the same bank, you are not expected to pay the stamp duty,” Mr Enamudu said, noting that 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.
Mr Enamudu said several transactions are exempt from the charge.
“Salary accounts and payment of salaries are exempted from stamp duty. Transfers below N10,000 are also exempted. Once it hits N10,000, you pay the N50 charge,” he said.
He added that transfers between personal accounts held in different banks still attract stamp duty.
“Once it crosses one financial institution to another, the stamp duty is triggered, even if it is your own account,” he said.
Mr Enamudu also noted that essential goods and services remain exempt from Value-Added Tax (VAT).
“You don’t pay VAT on basic food items, medicals, pharmaceuticals, education and other essentials,” he said.
Speaking on another point: housing, he highlighted a rent relief introduced under the reforms.
“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 N500,000,” he said
“If your rent is N3 million annually, 20 per cent is N600,000, but the relief is capped at N500,000. If your rent is N1 million, then your relief is ₦200,000,” he said.
Mr Enamudu also 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 workers, he said individuals with other income streams must file returns themselves.
“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.
Addressing broader concerns about the impact of the reforms, Mr 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 clarified that the often-cited N800,000 figure refers to taxable income, not total earnings.
“The narrative out there also needs correction. It is not that if you earn N800,000, you don’t pay tax. The law says if your taxable income is N800,000 and below,” he clarified.