Nigerian financial institutions have commenced the implementation of a significant new fiscal measure, deducting a 10 percent withholding tax on interest earned from foreign currency deposits. This move, effective from January 1, 2026, represents one of the first tangible applications of the country's recently enacted tax overhaul.
Bank Notifications and Regulatory Basis
Major commercial banks, including Access Bank, Zenith Bank, and United Bank for Africa (UBA), have begun informing their customers about the change. The tax is rooted in the Nigeria Tax Act, 2025. In a communication to customers dated December 31, 2025, Access Bank clarified that the 10% levy on interest from foreign currency holdings would be deducted at source and remitted directly to the federal government. The bank assured clients that this action is in full compliance with the updated regulations.
Broader Changes in Banking Charges
Alongside the new withholding tax, banks are adjusting other transaction fees. A notable change involves the Electronic Money Transfer Levy (EMTL). Previously applied to recipients for transfers of ₦10,000 and above, the fixed ₦50 charge will now be deducted from the sender's account. This adjustment is part of a wider regulatory effort to standardize banking charges and enhance transparency across Nigeria's financial system.
The directive for these changes originated from the Nigeria Revenue Service (NRS), formerly the Federal Inland Revenue Service (FIRS). On October 29, 2025, the NRS instructed financial institutions to deduct withholding tax on interest payments from short-term investment securities. The enactment of the new tax law has now expanded this directive to include interest on foreign currency deposits.
Presidential Endorsement and Exemptions
President Bola Tinubu confirmed the rollout of the tax reforms, describing them as a once-in-a-generation opportunity to rebuild the nation's fiscal framework. He emphasized that the goal is to create a fairer, more competitive, and sustainable tax system, not merely to increase the tax burden.
Concurrently, the reforms introduce major exemptions for low-income earners. As announced by Taiwo Oyedele, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, individuals earning approximately ₦100,000 per month or less will be exempt from paying personal income tax. This measure is designed to reduce hardship and improve fairness.
For customers holding dollar and other foreign currency accounts, the immediate effect is a slight reduction in net interest earnings, while the principal account balance remains untouched. As the new year progresses, this 10% withholding tax is set to become a standard feature nationwide, reinforcing the government's drive for improved tax compliance and revenue generation.
