The Tax Reform Chairman has rejected claims that tax authorities will directly debit the bank accounts of Nigerians for unpaid taxes, clarifying that neither the existing tax law nor the new consolidated tax framework allows such actions without due legal process.
The clarification comes after a wave of social media posts stating that recent tax administration measures would allow government agencies to deduct funds directly from bank accounts, raising concerns among individuals and businesses about the safety of their deposits.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, said there is no basis for fear that banks will debit customers' accounts on tax matters, stressing that enforcement processes will remain governed by the law and established procedures.
“Nobody in the banks will debit your bank accounts. Banks will not debit customers' accounts for tax default,” Oyedele said during a media workshop on the new consolidated tax law.
He explained that the concern arises from a misunderstanding of the Nigerian Tax Administration Act (NTAA), which comes into effect on January 1, 2026. Section 4 of the Act makes it mandatory for all taxable persons to have a Tax Identification Number (TIN) as part of efforts to strengthen tax compliance and monitoring.
Under the law, a taxable person is a person who carries on a trade, business or other economic activity to earn income. Therefore banks and other financial institutions are required to request Tax ID from taxable persons.
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Individuals who do not earn income and are not classified as taxable persons are not required to obtain a TIN to operate a bank account.
“Individuals who do not earn income, such as students and dependents, are not required to obtain a tax ID,” Oyedele said, adding that income earners and businesses with already issued TINs will not be required to obtain new tax identification numbers under the new framework.
He said the policy itself is not new. The Finance Act 2020 amended Section 49 of the Personal Income Tax Act to introduce the TIN requirement, while the NTAA now provides clearer legal backing and a more structured enforcement framework for provisions that have been in place for many years.
Under the new framework, commercial banks are required to file periodic reports on accounts with quarterly turnover of N25 million and above with the Federal Inland Revenue Service or other relevant tax agencies for monitoring purposes.
Oyedele said the revised threshold represents a significant increase from the previous N10 million benchmark, which translates to about N100 million in annual turnover before any reporting obligations are triggered. He stressed that the reporting requirement is designed to support risk-based tax administration and does not give banks the right to deduct funds from customer accounts.
While tax authorities may request information from financial institutions and, in limited cases, appoint banks as collection agents, such steps may only take place after a taxpayer's liability has been established through formal assessment and the exhaustion of statutory procedures.
Oyedele explained that the only existing mechanism that allows recovery of unpaid taxes from bank accounts is court-ordered garnishee, which he described as “a lengthy legal process that is almost never used.”
“Even in extreme cases where someone owes crores and refuses to pay, the government cannot wake up and remove the money,” he said. “They have to evaluate you, inform you, allow objections, finish the process, go to court and get a judge's order. Without that, no one can touch your account.”
Oyedele said, from January 1, 2026, taxable persons without a TIN may face operational difficulties in operating their bank accounts, but this should not be mistaken for automatic deductions or direct debits. This restriction does not apply to individuals who do not earn income from business or investments.
Nigeria's tax authorities have increasingly emphasized voluntary compliance as the backbone of revenue mobilization, with recent gains in non-oil revenues largely driven by improved filing systems, broader tax net coverage and digital platforms rather than aggressive enforcement actions.
Officials say clear communication will be key when the NTAA comes into effect, warning that misinformation could undermine trust in both the tax system and the banking sector, at a time when officials are trying to widen compliance and deepen financial inclusion.
