The Federal Government has assured Nigerians that the new tax regime does not authorise banks and other financial institutions to make arbitrary tax deductions from customers’ personal accounts, reaffirming that the Value Added Tax (VAT) rate remains at 7.5 per cent.
Gatekeepers News reports that the Nigeria Revenue Service (NRS) gave the clarification amid growing concerns among individuals, traders and business owners over the implications of the new tax laws 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 overseeing Kano, Jigawa and Katsina states, Samaila Abdullahi, said the reforms establish clear legal procedures for tax assessment, collection and recovery.
Abdullahi stressed that the new framework does not give financial institutions unrestricted powers to deduct money from customers’ accounts, adding that all tax collection activities must comply with the law.
He attributed much of the anxiety surrounding the reforms to misconceptions and inadequate public understanding of their provisions, urging Nigerians to rely on official information rather than speculation.
The tax administrator also clarified that money received as personal or business loans should not automatically be treated as taxable income, provided the transactions are 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,” Abdullahi explained.
He said maintaining accurate financial records would help taxpayers distinguish between loans, personal transfers, business turnover and taxable profits, thereby reducing the risk of misunderstandings during tax assessments.
According to him, the new tax framework is intended to promote transparency, strengthen compliance and provide clearer guidelines for taxpayers, rather than expose citizens to arbitrary deductions.
On the concerns of small businesses, Abdullahi acknowledged the need to address fears about the potential tax burden on traders and small-scale entrepreneurs.
He emphasised the importance of sustained public enlightenment to help business owners understand their tax obligations, available reliefs and the financial records required under the new regime.
Meanwhile, a resource person at the engagement, Abba Sani, said the NRS was 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 programme was designed around three key areas to improve public understanding of the reforms and address challenges facing taxpayers.
He explained that the first component focused on the provisions of the new tax laws affecting individuals, companies and businesses, including the applicable VAT rate and other relevant obligations.
The second component, titled “From Obligation to Voluntary Compliance: A Practical Guide for Taxpayers,” was designed to provide practical guidance on tax registration, record-keeping, reconciliation of financial transactions, filing of returns and payment procedures.
The third component, “Closing the Compliance Gap: Taxpayer Challenges, Service Delivery and Practical Solutions,” sought to identify barriers to compliance and develop practical measures to address them.
Sani urged taxpayers to report difficulties encountered during registration, digital tax processes, filing procedures and interactions with revenue officials.
He said feedback from taxpayers would help the Service identify operational challenges, improve service delivery and address conflicting interpretations of tax obligations.
The resource person added that effective implementation of the new tax regime would require cooperation between revenue authorities and taxpayers.
While the NRS was responsible for providing accurate information, consistent treatment and accessible support services, he said taxpayers were expected to maintain proper financial records, provide accurate information and meet their statutory obligations within stipulated deadlines.
Sani reiterated the Service’s commitment to continuous taxpayer education and stakeholder engagement to ensure that individuals and businesses understand the reforms and comply with the law without unnecessary difficulties.
