Nigerian Banks To Enhance Tax Compliance With New ₦5m Transaction Reporting Rule From 2026.
Starting January 2026, Nigerian banks will begin reporting customer accounts with monthly transactions exceeding ₦5 million to the Federal Inland Revenue Service (FIRS) and other tax authorities, marking a significant step towards greater financial transparency. This directive, part of the 2025 Tax Reform Act, was announced by the National Orientation Agency (NOA) via its official X account, highlighting the government’s commitment to aligning Nigeria’s fiscal policies with global standards.
The new rule, outlined in Section 30 of the Act, positions commercial banks as key players in a nationwide push to improve tax compliance and curb financial irregularities. By mandating monthly reports on high-value transactions, the reform aims to ensure that taxable income, particularly from high-net-worth individuals and the informal sector, is accurately captured. The initiative is expected to bolster government revenue, enabling increased investment in critical public services such as infrastructure, healthcare, and education.
The NOA emphasized that the reform is part of a broader effort to modernise Nigeria’s tax system, making it more efficient and equitable. Alongside the transaction reporting requirement, the 2025 Tax Reform Act introduces taxpayer-friendly measures, including an exemption from personal income tax for individuals earning up to ₦800,000 annually (approximately ₦66,667 monthly), up from the previous threshold of ₦500,000. This change is designed to ease the financial burden on low- and middle-income earners, fostering greater disposable income and stimulating economic activity.
Financial analysts have praised the move as a strategic step towards expanding Nigeria’s tax base without overburdening ordinary citizens. “This reform strikes a balance between enforcement and fairness,” said Dr. Chidi Okoro, an economist in Lagos. “By focusing on high-value transactions, the government can target unreported income while protecting low-income earners from additional tax pressures.” The policy is also expected to encourage formal financial inclusion, as businesses and individuals are incentivised to operate within the regulated banking system.
To support the transition, the newly established Nigeria Revenue Service (NRS), which replaces the FIRS, will leverage digital platforms for seamless registration, filing, and payment processes. The NOA has announced plans for a nationwide awareness campaign to educate citizens and businesses on the new requirements, ensuring a smooth rollout. Banks will also be required to enhance their data analytics and reporting systems to comply with the directive, a move that could drive innovation in the financial sector.
Public response has been largely positive, with many Nigerians welcoming the focus on transparency. “It’s good to see the government taking steps to ensure everyone pays their fair share,” said Aisha Mohammed, a small business owner in Abuja. “As long as the process is clear and fair, this could help fund better schools and hospitals.” However, some have called for robust data protection measures to safeguard customer information, a concern the NRS has pledged to address through strict confidentiality protocols.
As Nigeria prepares for the 2026 implementation, the new tax law signals a transformative shift towards a more transparent and inclusive fiscal system, promising benefits for both the government and its citizens.
