New tax law does not target bank inflows, only income —analyst explains

Economic analyst Kalu Aja has clarified that money entering a bank account is not automatically taxed under Nigeria’s new tax regime, dismissing widespread public fears surrounding the revised tax framework that came into effect on January 1, 2026.

Aja made the clarification on Friday while speaking on the topic, “How the New Tax Law Affects Your Pay, Business and Daily Spending,” amid growing concerns that bank deposits would now attract direct taxation.

According to him, the new tax law is focused strictly on income, not on every inflow into a bank account, stressing that proper and timely tax filing remains the most important legal protection for individuals and small businesses.

Addressing misconceptions about direct taxation of bank deposits, Aja said the law does not tax money simply because it enters an account, but rather taxes income earned by a taxpayer.

“Forget about trying to say if money has come into your account. No. If it has come in as income, it’s taxable,” he explained.

He noted that the law broadly defines income to include salaries, business profits, interest, digital earnings and other gains, particularly affecting individuals and small and medium-sized enterprises (SMEs).

“Literally, any income that you make—any income that comes into your account as a taxpayer individual—is taxable,” Aja said.

However, he was emphatic that several categories of inflows are explicitly exempt from taxation because they do not qualify as income. These include gifts, inheritance, loans and life insurance payouts.

“If I borrow money from a bank, the money coming into my account is a loan. So it’s not income,” he explained.

He added that gifts, regardless of their size, do not attract tax liability.

“If someone sends me money as a gift, that is not income to me, and I will not include it as taxable income,” Aja said.

Aja warned that the biggest risk under the new tax law is failure to file returns, not the mere receipt of money.

He explained that the revised framework has removed automatic tax reliefs that taxpayers previously enjoyed, placing the responsibility firmly on individuals to declare income and claim exemptions.

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“They’ve changed the structure. It puts the onus on you, the taxpayer, to go out and buy exemptions. Otherwise, you expose that income to taxation,” he said.

He recalled that under the old system, taxpayers automatically received 20 per cent relief plus N200,000, whether or not they filed returns—a provision that no longer exists.

While acknowledging that tax authorities can see inflows into bank accounts, Aja stressed that they cannot tax those inflows automatically or withdraw funds arbitrarily.

“They don’t tax inflow. They want to tax income,” he said, explaining that filing tax returns gives taxpayers the legal opportunity to explain the source of funds.

“When you file, that’s when they can decide whether they agree with your filing or challenge it,” he added.

He cautioned that failure to file could lead tax authorities to assume that inflows are taxable income.

“If you don’t file, the tax man will say, ‘We saw this money come in, we assume it’s income, and we want you to pay tax,’” Aja warned.

He also dismissed fears of tax authorities making direct deductions from bank accounts without due process.

“They cannot go into your account and take funds before you have filed,” he said, adding that even after filing, enforcement actions must follow legal procedures.

“They cannot do that unless they have a court order,” Aja stated.