The Federal Government has moved to quell rising public anxiety, firmly denying reports that it plans to scrutinise personal bank account transaction descriptions for tax assessment purposes. The clarification was delivered by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, during a televised interview.
No Policy for Surveillance via Bank Narrations
Taiwo Oyedele explicitly stated that there is no official policy directing tax authorities to examine bank transfer narrations to determine an individual's tax liabilities. He urged Nigerians not to panic over circulating rumours which suggested that routine banking descriptions would become a tool for government surveillance. Oyedele reaffirmed that Nigeria's tax system continues to operate on a foundation of voluntary compliance and self-declaration.
"At the end of the year, you tell the government yourself, this is my income and here is the tax, and if you’re exempted, you don’t need to pay any tax," Oyedele explained, outlining the core principle of the process. He emphasised that the government's focus is on simplifying tax compliance, particularly for low-income earners and micro-enterprises.
Tax Exemption for Small Businesses Under ₦12 Million
In a significant relief for small business owners, Oyedele disclosed that enterprises with an annual turnover of ₦12 million or less are considered to have no tax-paying capacity and are therefore fully exempt from income tax under the current reform framework. He clarified that the government is not taxing the turnover of these small businesses.
The committee has identified vulnerable categories within the informal sector—such as vulcanisers, petty traders, and similar micro-enterprises—that typically struggle to generate meaningful profit. To protect them from harassment, such operators will be issued official tax exemption certificates or stickers.
Expert Advice on Clear Transaction Descriptions
The government's clarification follows earlier reports about the 2026 tax reforms, which had sparked concerns over the potential use of digital banking data. While authorities deny direct monitoring, tax consultants advise that maintaining clear and accurate transaction records is crucial for smooth personal tax filing.
Experts note that problems may arise during tax assessments if transaction histories are poorly described, making it difficult to distinguish between taxable income and non-taxable transfers like gifts or personal savings. Clear documentation helps prevent unnecessary disputes with tax authorities by ensuring individuals are only taxed on legitimate taxable income.
To ensure compliance and avoid confusion, financial and tax experts recommend using simple, honest descriptions for bank transfers, including:
- Family support or gifts: “Gift / Family support”
- Repayment from friends: “Refund / Reimbursement”
- Transferring your own money: “Personal transfer / Savings”
- Business sales: Clearly describe the item sold, e.g., “Payment for two cartons of Indomie”
In a related development, the Federal Government has signalled to banks that, effective January 1, 2026, they will be required to request a Tax Identification Number (TIN) from all taxable Nigerians operating accounts. This move is part of the broader sweep of reforms aimed at formalising and improving the efficiency of the tax system.
