New Tax Law: Simple, Legal Bank Transfer Narrations To Avoid Paying Tax
- The new tax regime is set to be implemented from January 2026 and will change how Nigerians execute financial transactions
- Tax is based on taxable income, and correctly describing payments ensures individuals only pay tax when required, avoiding overpayment during tax filings
- Nigerians are urged to use clear and accurate bank transfer narrations ahead of the new tax regime launching in January 2026
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Nigerians may need to pay closer attention to the details of their bank transfer narrations as the federal government gears up to implement a new tax regime starting January 2026.
The government has indicated that the reform will leverage digital banking data to enhance tax compliance, making the accuracy of transaction descriptions increasingly important.
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Experts warn that vague or misleading narrations could trigger additional scrutiny from tax authorities, potentially leading to audits or penalties.
Tax consultants say that tax is mainly focused on taxable income, money paid in exchange for a particular service.
If payments are not correctly described in bank transfer narrations, individuals may face complications or even pay more when filing their tax returns.
Correctly describing transactions ensures that taxpayers only pay tax when required.
To help Nigerians comply, simple and legal narrations can be used in various situations:
- Family support or gifts: “Gift / Family support”
- Repayment from friends: “Refund / Reimbursement”
- Transferring your own money: “Personal transfer / Savings”
- Money lent to you: “Loan received”
- Investing personal money into a business: “Capital contribution”
- POS transactions: “POS transaction”
- Business sales: Describe the item sold, e.g., “Payment for two cartons of Indomie”
However, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee explained that Nigerians bank account is safe with or without narration.
Oyedele, however, maintained that it is good as the new tax law will make Nigerians more aware of their spending.
He said:
"Nobody will debit your account, whether you transfer N1 billion or N5,000, regardless of how you describe it; at the end of the year, you will report to the government how much you earned."
Source: Facebook
Truths and lies about new tax law
Claim (Lie) | Fact (Truth) |
The government is introducing new taxes on ordinary Nigerians. | The reforms are aimed at reducing the tax burden on low-income earners. |
Bank accounts will be debited automatically from January 2026. | No automatic bank debits will begin in 2026. |
Small businesses will suffer under the new tax rules. | Small businesses are expected to benefit from the reforms. |
States will lose revenue due to the tax changes. | States will receive revenue in a fairer and more balanced manner. |
The tax reform is only about raising government revenue. | The reform is designed to stimulate economic growth. |
A 30% capital gains tax will apply to capital market investments. | Most investors qualify for capital gains tax exemptions. |
Minimum wage earners will pay PAYE tax. | Minimum wage earners remain exempt from PAYE. |
Gifts and remittances will be taxed. | Gifts and remittances are not taxable. |
Nigerians in the diaspora will be taxed. | Nigerians living abroad are not affected by the reform. |
Pension and retirement benefits will be taxed. | Pension and retirement benefits remain tax-free. |
N50 debit on bank accounts
Earlier, Legit.ng reported that banks in Nigeria will begin charging senders a N50 stamp duty on electronic transfers of N10,000 and above, following the implementation of the updated Tax Act starting January 1, 2026.
The levy, also referred to as the Electronic Money Transfer Levy (EMTL), is a one-off charge applied to electronic receipt or transfer of funds deposited in any commercial bank or financial institution.
The new bank charge applies to transfers into both personal and business accounts
Source: Legit.ng
