Just this week, the Director of the National Orientation Agency (NOA), Ondo State, Mr. James Adekunle, was invited to a public lecture titled Nigeria’s New Tax Laws & Public Outcry, organised by Ekimogun Youths Connect (EYC).
During the session, Mr. Adekunle responded to a series of questions from the audience, offering clarifications on widespread concerns surrounding the new tax reforms. Below are the questions as raised by participants and the explanations provided by the NOA director.
Many Nigerians have been in panic mode for some months now, with information flying on social media that personal bank accounts would be frozen unless owners provide their Tax Identification Number (TIN).
Do individuals need a TIN to keep or open a bank account?
Mr. Adekunle explained that NIN and BVN are sufficient to open and maintain bank accounts, stressing that there is no reason for panic regarding tax reforms and personal banking.
Another information spreading on social media is that people should use the description/note column to state the reason they’re sending money to avoid personal money or gift money being taxed.
I want to ask, will transfers and deposits into personal bank accounts be taxed, and how will the Tax authority differentiate the money sent for healthcare, education etc and sale transactions?
He clarified that money in bank accounts and daily transactions are not what will be taxed. Taxation is based on taxable income, meaning income after deducting expenses. For business owners, costs of running the business are removed, and only the remaining income is taxed.
Will churches and mosques begin to pay tax now?
He stated that students, pensioners, people earning less than ₦800,000 annually, and places of worship such as churches and mosques are exempt from taxation.
If I took a loan from a lender, be as a bank, cooperative society or others, will I pay tax on the money?
According to him, loans from banks, cooperatives, or other lenders are not taxable to the recipient. The lending institution is the one taxed on income generated from lending activities.
How will the tax authority know the money I earn from others?
Mr. Adekunle emphasised the importance of keeping financial records, advising traders and business owners to document income and expenditure. He added that technology will be deployed under the new tax law, which is why cash transactions are being discouraged and electronic transactions promoted, as they are easier to track. He noted that loans and gifts paid into accounts are not taxable income.
What if I get overtaxed, what can I do?
He explained that Nigerians will now benefit from tax refunds. If someone is found to have been overtaxed at the end of the tax period, the excess will be refunded. He added that arbitrators are available to resolve disputes between taxpayers and tax authorities, largely free of charge, and advised people to keep proper records.
What are the new progressive tax bands?
Mr. Adekunle explained that ₦800,000 is the minimum threshold for personal income tax. Income above this is taxed progressively: ₦2.2 million at 15%, ₦9 million at 18%, ₦25 million at 23%, and ₦50 million at 25%.
How do I know my taxable income?
He said calculating taxable income is not difficult and advised Nigerians to visit fiscalreforms.ng, where a tax calculator is available.
Do individuals have to pay tax on remittances or family support money coming from abroad?
He clarified that family support money sent from abroad is not taxable, as it was earned and taxed outside Nigeria. Only income earned abroad while residing in Nigeria is taxable.
If I send 10 million naira to a person on a sick bed, how will the government know the recipient did not earn it but for healthcare support?
He advised that such transfers should include a clear narration, adding that funds sent for healthcare support are not taxable.
We have many Nigerians who are poor and can not keep financial records, don’t you think this is a big issue?
Mr. Adekunle acknowledged the challenge but explained that most petty traders would not earn up to ₦800,000 annually after deductions and are therefore exempt. He added that the tax regime favours low-income earners, while those earning above ₦100 million annually are expected to be capable of keeping records or employing someone to do so.
Is this tax thing a blessing or a curse to a common man?
He described the reform as a blessing, explaining that the progressive tax system ensures low-income earners pay little or no tax, while higher earners pay more. He noted that this marks a shift from the previous regressive system, where poorer Nigerians paid proportionally more.
What has changed in the revenue-sharing formula between federal, state, and local governments?
Mr. Adekunle explained that a larger share of tax revenue now goes to states and local governments, making accountability easier. He noted that states can domesticate the tax law and urged local governments to improve transparency by publishing financial records.
How will capital gains and investment income be taxed, especially when investors continue to reinvest their proceeds from sales without withdrawing them to their bank accounts?
He said no tax applies if share sales are below ₦150 million and profits are under ₦10 million, noting that such transactions mainly affect the wealthy.
Under these new tax reforms, digital assets like crypto, NFTs, and online income from influencers, remote workers are now taxable.
What are the mechanisms that have been put in place to accurately calculate and deduct these taxes?
He explained that tax authorities have mechanisms in place and urged individuals to file returns early. He reiterated that electronic transactions make tracking and taxation easier.
Does Income Tax go entirely to the state government where I live or my state of origin?
He clarified that tax is based on where a person lives, works, and earns income, not their state of origin.
If I have a company and a shop, do I still pay trader taxes + tax under the new law?
Similarly, most small business owners pay double taxes to their local government, union, etc. What is the stance of the New Tax Laws on this?
He explained that the reforms are designed to curb multiple taxation by harmonising taxes across federal, state, and local governments.
What happens if eligible individuals or businesses fail to file or pay their taxes under the new system?
Mr. Adekunle said filing tax returns is now easier through local, state, and online platforms. He warned that the new system leaves little room for evasion and that defaulters may face enforcement actions, including court cases.
Will money transferred to bank accounts of organisations like cooperative societies, churches, and nonprofit organisations like Ekimogun Youths Connect be taxed?
He explained that such organisations should keep proper records, with union executives acting as intermediaries between members and tax authorities.
The government has increased VAT again, isn’t this too much of our money?
He clarified that the 7.5% VAT applies to service charges, not directly to every transaction.
Mr. Adekunle concluded that the tax reforms align with Nigeria’s economic emancipation and have received commendation from global leaders, noting that without some of these reforms introduced by President Bola Ahmed Tinubu, the naira exchange rate and petroleum prices would not have eased.
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