….Reassures citizens no deductions from bank accounts

….Low-income earners to benefit from exemptions on food, transport

…Tax reforms focus on profits, modernisation, simpler compliance

By Joel Ajayi

The Executive Chairman of the Nigeria Revenue Service (NRS), Dr Zacch Adedeji, has sought to allay rising public concerns surrounding Nigerias recently implemented tax reforms, firmly dismissing speculation that funds held in bank accounts may be subjected to taxation.

Speaking on Tuesday during Journalists Hangout, a current affairs programme on TVC, Adedeji emphasised that neither the former tax regime nor the new legal framework empowers any authority to levy taxes on bank balances, savings, transfers or account holdings. He stressed that the countrys tax system remains fundamentally profit-based.

Whether under the old tax law or the new one, nobody has any business with your personal bank account, whether you are an individual or a company, he said.

Tax is calculated as a percentage of your profits. Assets and savings are not taxed; only profits and returns are.His remarks follow widespread rumours suggesting that the reforms, effective from 1 January 2026, would enable automatic debits from bank accounts based on transaction descriptions, balances, or transfers.

Adedeji described such claims as sheer misinformation, stating unequivocally that no law authorises tax authorities to direct banks to deduct money merely because funds are transferred or retained.

There is no law that allows anyone to go into your bank account and tax you simply because you transfer or keep money, he reiterated, adding that personal transfers, gifts, and movement of funds between accounts are not, by default, taxable events.

He further debunked suggestions that transaction narrations could trigger tax deductions, noting that no existing tax legislation – old or new – contains such provisions.Adedeji also clarified that the transition from the Federal Inland Revenue Service (FIRS), to the Nigeria Revenue Service (NRS), represents a comprehensive institutional reform rather than a mere change of nomenclature.

The overhaul, he explained, aims to modernise tax administration, simplify compliance, and enhance efficiency.

Transition provisions were embedded in the law signed in June 2025, with a January 2026 commencement date to give citizens and businesses sufficient time to adjust.Addressing anxieties surrounding the newly introduced development levy, the NRS chief stated that it does not constitute a fresh tax.

Rather, it consolidates existing earmarked taxes, such as the education tax and police trust fund levy, into a single charge. This consolidation, he noted, reduces multiplicity, eases planning for businesses, and still channels funding to education, security, and other development priorities.

Previously, we had several earmarked taxes – education tax, police trust fund and others – which made planning difficult for businesses, he explained.

With the development tax, these are consolidated into one item, simplifying compliance while still supporting those key sectors.Adedeji emphasised that the reforms were deliberately structured to protect poorer Nigerians.

He pointed out that essential goods and services absorbing the bulk of low-income expenditure, particularly food and transportation, are exempt from transactional taxes.If you consider the exemption list, about 90 per cent of the disposable income of low-income earners goes on food and transport, he said.

These items are exempted from transactional taxes.

He further disclosed that workers on lower salary bands would notice reduced tax deductions in their January payslips.Responding to calls for suspension of the new tax laws, Adedeji maintained that such demands were inconsistent with democratic principles. Suspension of law has no place in a democracy.

Once a law is passed, it becomes law, he said, warning that suspension would create a legal vacuum since the previous tax laws had already been repealed.

On criticisms reportedly raised by KPMG, he explained that government preferred constructive engagement over confrontation.

He confirmed that he had met with representatives of the firm to discuss areas of concern, saying it was natural for people to misunderstand aspects of new legislation. Feedback, he stated, remains welcome as part of ongoing implementation.He further clarified that existing tax clearance certificates remain valid and reaffirmed that withholding tax constitutes a prepaid tax, not an additional charge.

Proper filing, he said, would ensure that any withheld sums are credited against final liabilities.Adedeji added that taxation of digital asset activities applies only to realised profits, not to underlying capital. He highlighted that the reforms have eliminated minimum tax provisions that compelled payment even when businesses made losses.

Where there are losses, you do not pay tax, because tax is imposed only on profits, he said.

According to him, the overarching objective of the reforms is to harmonise Nigerias tax system, reduce manual processes, and deepen the use of technology and revenue intelligence, ultimately fostering a fairer, more transparent and efficient regime.

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