Banks to Report Transactions Above N5m Monthly Under New Tax Law Effective 2026

 

Nigerian banks are now required to report all customer accounts with monthly transactions exceeding ₦5 million to the country’s tax authorities, following a new directive from the National Orientation Agency (NOA).

The mandate is part of a comprehensive tax reform signed into law to boost compliance, reduce financial irregularities, and align Nigeria’s fiscal framework with international best practices.

Under Section 30 of the 2025 Tax Reform Act, commercial banks must monitor and submit monthly reports of high-value transactions to the Federal Inland Revenue Service (FIRS) and other relevant tax agencies, positioning them at the heart of a major transparency initiative.

Announcing the policy on its official X (formerly Twitter) account, the NOA explained that the measure is one of several aimed at ensuring taxable income does not escape regulatory scrutiny.

According to analysts, the move could significantly strengthen the government’s ability to detect unreported earnings and increase revenue collection, particularly from the informal sector and high-net-worth individuals.

Beyond mandatory transaction reporting, the reform also introduces several taxpayer-friendly measures designed to ease the burden on low- and middle-income Nigerians:

Individuals earning up to ₦800,000 annually (₦66,667 per month) are now exempt from personal income tax, an increase from the previous threshold of ₦500,000. This measure aims to protect low-income earners and provide relief amid rising living costs.

The reform also clarifies that Section 31 of the Act exempts capital gains from the sale of a primary residence, while Section 50 excludes from taxable income compensation of up to ₦10 million for injury, job loss, or defamation offering greater financial protection to affected individuals.

Additionally, a new value-added tax (VAT) distribution formula will take effect in 2026:

Federal Government: 10% (down from 15%)

State Governments: 55% (up from 50%), allocated as follows:

50% equally among states

20% based on population

30% based on consumption

Local Governments: 35% (unchanged)

This revised formula benefits high-consumption states such as Lagos and Rivers, incentivizing subnational governments to stimulate their local economies and boost internal revenue generation.