Tax Reform or Public Panic? Inside Nigeria’s Controversial 2026 Tax Changes
Oluwafunbi Bello 
ABUJA, Nigeria – When rumours began spreading across Nigeria that the government would soon begin “taxing bank deposits” and “deducting money directly from savings,” panic followed swiftly. Some Nigerians rushed to withdraw cash. Others vowed to abandon banks altogether. WhatsApp voice notes warned of looming hardship. Market chatter grew anxious. But an examination of Nigeria’s newly gazetted 2026 tax reforms tells a more complex story — one that reveals a widening gap between public perception and policy reality.
In this report, Oluwafunbi Bello separates misinformation from fact, analyses the new tax framework, and explores how poor public communication has fuelled fear, even as the reforms themselves largely shield low-income earners and small businesses.
At its heart lies a critical question: Are Nigerians reacting to real economic harm — or to a failure of public understanding?
A Reform Introduced in Silence
Nigeria’s tax reforms, effective from January 1, 2026, were designed to expand the tax net while easing the burden on ordinary citizens. Yet for many Nigerians, the first encounter with the policy came not through official briefings, but through social media speculation.
“There is no need for business owners to panic and want to withdraw their money from the bank,” said Mr. Temitope Samuel, a senior official at Zenith Bank. “The tax system is not as scary as it sounds.”
Accountants and economists interviewed for this report echoed the concern that a lack of clear public education — rather than the tax law itself — triggered the panic.
Who Actually Pays No Tax?
Contrary to widespread fear, the reforms significantly raise protection thresholds.
For salary earners, anyone earning ₦800,000 or less annually — about ₦66,667 per month — pays zero personal income tax.
For small businesses, the protection is even broader. Companies with annual turnover of ₦100 million or less are exempt from company income tax.
Digital workers and online entrepreneurs earning below ₦25 million annually are exempt from Value Added Tax (VAT).
“These thresholds are deliberate,” explained Mr. Afolayan Gbenga, an accountant interviewed for this report. “The policy is structured to protect low-income earners and micro businesses. The tax isn’t that complicated. With the right description of your transactions, you can avoid unnecessary tax payments.”
The Bank Account Myth
Perhaps the most persistent rumour is that banks will now “tax deposits” or “monitor and deduct money directly from accounts.” That claim is false.
In an interview with Africa Health Report, (AHR), owner of Ayaba Blessed Enterprise, Ayaba Blessing, explained her experience:
“I use cash mostly and only have savings at the bank. Only 10% of the INTEREST will be deducted, not my main money. Transfers made to my account by customers are NOT taxed.”
Under the new regime
Savings are not taxed; Salary payments are not taxed at source by banks, customer transfers are not taxed, only interest earned on savings may attract a 10% withholding tax.
For Ayaba, whose annual business turnover is ₦3.6 million, the total tax exposure is minimal — possibly ₦500 per year on interest income.
What Nigerians Buy Tax-Free
One of the least discussed aspects of the reform is its expansion of VAT exemptions, especially on essentials.
According to Mr. Gbenga, the following items attract 0% VAT or are fully exempt: Food & Household Staples, Rice, beans, yam, garri, bread (0% VAT), Health & Hygiene, Medicines (0% VAT), Hospital services (Exempt), Sanitary pads and tampons (Exempt), Baby food, milk and diapers (Exempt), Housing & Education, Rent (Exempt), Land and buildings (Exempt), School fees and textbooks (0% VAT), and Transport & Energy, Shared passenger transport (buses, danfos, keke) (Exempt), Petrol, diesel, solar equipment (VAT suspended or exempt), and Electric vehicles and parts (Exempt)
Agriculture
Fertilisers, seeds, animal feed, live animals (Exempt)
Farm equipment (Exempt)
These exemptions directly affect household spending, helping to soften inflationary pressure rather than worsen it.
Why Registration Matters
Despite the protections, fear remains strongest among unregistered traders.
Suleiman Abubakar, who owns a cosmetics shop, said registration brought clarity:
“My business has been registered with CAC since last year, so I’m not afraid of the tax. If I earn more than the tax-free threshold for businesses, I believe I won’t be charged irresponsibly.”
Registration with the Corporate Affairs Commission (CAC) allows businesses to:
Prove eligibility for zero tax
Avoid arbitrary assessments
Access formal protections
By contrast, a provision shop owner, Dauda Isah, expressed anxiety:
“With this tax reform, I might go to the bank to withdraw my money if I’m taxed unnecessarily.”
Experts say the irony is that registration would protect Dauda entirely, given his turnover is well below ₦100 million.
Simple Rules That Reduce Fear
Accountants interviewed stress that compliance does not require sophistication:
Describe transactions properly — especially tax-free goods
Keep simple records — even a notebook
Register your business
Obtain and link your TIN to BVN and NIN
Do not fear your bank
“The system is designed to be helpful, not punitive,” Mr. Gbenga said.
What About Bigger Earners?
Businesses earning above ₦100 million annually will pay tax — but analysts note this reflects progressive taxation.
“If you’re earning over ₦8 million monthly, contributing to roads, schools and hospitals is reasonable,” said a labour union economist consulted for this report.
Cryptocurrency profits are also taxed at 10%, applied strictly to gains — not capital.
Panic vs Policy Reality
At its core, Nigeria’s tax reform is less about extraction and more about rebalancing — shifting burden upward while protecting vulnerable earners.
What has failed is communication.
Without sustained public education, rumours filled the vacuum, eroding trust and encouraging counterproductive behaviour such as cash hoarding.
As Mr. Samuel of Zenith Bank warned:
“There is no need to rush to the bank and withdraw your money.”
Conclusion: Reform Needs Explanation, Not Fear
Nigeria’s 2026 tax reforms are not perfect. But the evidence shows they are not designed to punish the poor, nor to drain savings.
Instead, they reveal a deeper challenge: policy without public understanding breed’s panic.
Until government agencies invest in sustained, grassroots explanation, fear — not facts — will continue to shape economic behaviour.
As Mr. Gbenga put it:
“With the right descriptions of transactions, unnecessary tax payment can be avoided.”
About the Author
Edino Chubiyo Cornelius 
Oluwatobi Adu 
Hussaini Ibrahim 