N50 Stamp Duty: Tax Experts Clarify Deductions from Bank Balances under New Laws
- Tax experts clarify that only electronic transfers attract a ₦50 stamp duty, not bank balances
- New tax law shifts stamp duty burden solely to the sender, exempting certain transactions and rent payments
- Essential goods remain VAT-exempt, while 20% rent relief is introduced, capped at ₦500,000 annually
Tax experts have dismissed widespread claims that Nigerians’ bank balances are now subject to tax under the country’s new tax laws, clarifying that only specific electronic transfers attract a ₦50 stamp duty.
The chairman of the Chartered Institute of Taxation of Nigeria (CITN), Abuja District, Mr Ben Enamudu, made this clarification during an interview on ARISE News recently, stressing that misinformation has fuelled unnecessary anxiety among bank customers.
Source: Twitter
“There is a wrong narrative out there that the money in your bank account will be taxed. There is no provision for that in our tax laws. Nobody taxes the money sitting in your bank account,” Enamudu said.
What the ₦50 stamp duty really applies to
According to Enamudu, the ₦50 charge often discussed is not a tax on deposits but a stamp duty applied to qualifying electronic transfers.
“When you make a transfer from your account to another person, a ₦50 stamp duty applies,” he explained.
However, transfers between multiple accounts held within the same bank are exempt from the charge. The duty is only triggered when funds move from one financial institution to another, even if the accounts belong to the same individual.
Stamp duty: Who pays, who is exempt
One major change under the new tax reform is who bears the cost of the stamp duty.
“Before now, both the sender and the receiver bore the burden. Under the new law, only the sender pays,” Enamudu said.
Several transactions are also exempt. Salary payments and salary accounts do not attract stamp duty, while transfers below ₦10,000 are fully exempt. The ₦50 charge only applies once a transfer reaches ₦10,000 and above.
VAT and rent relief under the new law
Beyond stamp duty, Enamudu clarified that essential goods and services remain exempt from Value Added Tax.
“You don’t pay VAT on basic food items, medical services, pharmaceuticals, education and other essentials,” he said.
The new tax framework also introduces relief for tenants. Individuals can now claim a rent relief equivalent to 20 per cent of rent paid, capped at ₦500,000 annually.
“If your rent is ₦3 million, 20 per cent is ₦600,000, but the relief is capped at ₦500,000. If your rent is ₦1 million, your relief is ₦200,000,” he explained.
Income thresholds and self-assessment explained
Addressing confusion around the widely cited ₦800,000 threshold, Enamudu said the figure refers to taxable income, not total earnings.
“The law does not say if you earn ₦800,000 you won’t pay tax. It says if your taxable income is ₦800,000 and below,” he noted.
Statutory deductions such as pension contributions, NHIS, National Housing Fund, insurance premiums, and interest on owner-occupied homes are removed before taxable income is calculated.
Nigeria continues to operate a self-assessment tax system. While employers remit PAYE, individuals with additional income streams such as rent or business income are required to declare all earnings themselves.
Pro-poor focus and implementation timeline
Enamudu described the new tax law as strongly pro-poor, particularly for low-income earners and those in the informal sector, including market traders who may be taxed under presumptive systems designed by state governments.
Source: Twitter
“The tax act is heavily pro-poor. Government wants to tax the fruit, not the seed,” he said.
He confirmed that the law took effect on January 4, 2026, with implementation currently in a transitional phase. President Bola Tinubu has maintained that the reforms are aimed at fairness, harmonisation and long-term fiscal stability, not higher taxes.
Banks begin 10% tax on dollar deposits
Legit.ng previously reported that Nigerian banks began implementing a 10 percent withholding tax on interest earned from foreign currency deposits, marking one of the first visible outcomes of the country’s newly enacted tax reforms.
The deductions took effect from January 1, 2026, and apply to interest on dollar and other foreign currency accounts held by customers.
Major lenders, including Access Bank, Zenith Bank, United Bank for Africa (UBA), and others, have started notifying customers of the change, which is rooted in the Nigeria Tax Act, 2025.
Proofreading by Kola Muhammed, copy editor at Legit.ng.
Source: Legit.ng
