Nigerian Banks to Report Transactions Above ₦5m Monthly Under New Tax Law—Effective from 2026

Starting in 2026, Nigerian banks will be required to report all customer accounts with monthly transactions exceeding ₦5 million to the Federal Inland Revenue Service (FIRS) and other tax authorities, as part of sweeping new tax reforms under the 2025 Tax Reform Act.

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Announced by the National Orientation Agency (NOA) via its official X (formerly Twitter) handle, the directive is aimed at improving tax compliance, curbing financial irregularities, and aligning Nigeria’s fiscal policies with international standards. The new rule, anchored in Section 30 of the Act, places commercial banks at the center of a renewed push for financial transparency…..as reported by instablog9ja.

According to the NOA, this monthly reporting requirement is part of broader efforts to ensure that taxable income, particularly from high-value and informal sector transactions, is captured within the tax system.

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In addition to the transaction monitoring directive, the Act introduces several relief measures for low- and middle-income earners. Notably, the threshold for personal income tax exemption has been raised from ₦500,000 to ₦800,000 annually (about ₦66,667 monthly), offering more protection to those struggling with rising living costs.

The reforms also bring new tax exemptions: Capital gains from the sale of a primary residence will no longer be taxed. Compensation of up to ₦10 million for job loss, injury, or defamation will be exempt from taxation.

A new VAT sharing formula will also take effect from 2026:

  • Federal Government: 10% (reduced from 15%)
  • State Governments: 55% (up from 50%), distributed as follows: 50% equally, 20% by population, 30% by consumption
  • Local Governments: 35% (unchanged)
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Experts have welcomed the reforms, describing them as a strategic move to broaden Nigeria’s tax base without putting additional pressure on low-income citizens. Analysts believe the focus on high-value transactions and a consumption-based VAT distribution model signals a shift toward a more equitable and transparent tax system.

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