Starting in 2026, Nigerian banks will be required to report all customer accounts with monthly transactions exceeding ₦5 million to the country’s tax authorities. This new directive, announced by the National Orientation Agency (NOA), is part of comprehensive tax reforms signed into law under the 2025 Tax Reform Act.

The reform, detailed in Section 30 of the Act, mandates commercial banks to track and submit monthly reports of high-value transactions to the Federal Inland Revenue Service (FIRS) and other relevant bodies. The move is intended to boost tax compliance, deter financial misconduct, and bring Nigeria’s tax system closer to international best practices.

According to a statement shared via the NOA’s official X (formerly Twitter) account, the policy aims to ensure that taxable income is properly monitored and not lost to regulatory loopholes.

Experts believe the initiative will help the government better track undeclared income, particularly within the informal sector and among high-net-worth individuals, ultimately strengthening national revenue generation.

Beyond transaction monitoring, the reform also introduces measures to ease the tax burden on low- and middle-income earners:

Personal Income Tax Exemption: The annual income threshold for exemption has been raised from ₦500,000 to ₦800,000 (equivalent to ₦66,667 monthly), shielding more low-income earners from tax obligations.

Capital Gains Relief: Section 31 now exempts capital gains from the sale of a primary residence from taxation.

Compensation Exemption: Section 50 exempts up to ₦10 million in compensation for personal injury, job loss, or defamation from taxable income.

Additionally, a revised Value-Added Tax (VAT) sharing formula will take effect in 2026:

Federal Government: 10% (down from 15%)

State Governments: 55% (up from 50%) – distributed as 50% equally, 20% by population, and 30% by consumption

Local Governments: 35% (unchanged)

This new structure benefits high-consumption states like Lagos and Rivers, incentivizing state governments to enhance local revenue through economic activity.

Industry stakeholders say these combined reforms represent a major shift in Nigeria’s tax strategy—one that emphasizes equity, transparency, and economic productivity.

While financial analysts have applauded the move for broadening the tax base without burdening the poor, privacy advocates and some financial institutions have called for robust data protection measures to prevent misuse of transaction data.

As implementation nears, all eyes will be on how these changes influence taxpayer behavior, compliance levels, and government income.