Dr. Anthonia Alebiosu
If you have recently noticed banks applying commissions and VAT more consistently to certain transactions, it is not by chance. It reflects a deeper shift under Nigeria’s evolving tax framework, one that places greater emphasis on transparency, accurate classification, and data driven compliance across the financial system.
At the heart of the new tax approach is a simple objective to reduce leakages, improve accountability, and ensure that taxable income is properly identified and assessed. What this shift does not mean is that every inflow into your bank account is now taxable. What it does mean is that clarity and classification have become far more important than before.
YOU CAN ALSO READ: Why Productivity, Not Participation, Is Nigeria’s Real Agricultural Problem
Under Nigerian tax law, tax is triggered by income, not by the mere movement of money. However, with increased data matching between banks and tax authorities, transactions are now viewed through a more analytical lens. How an inflow is described can influence how it is interpreted, queried, or categorised. This is where many well meaning taxpayers run into avoidable trouble.
With the new framework in place, banks are required to maintain clearer and more detailed transaction records, tax authorities increasingly rely on third party data, vague or generic inflows are more likely to be questioned, and proper descriptions help protect compliant individuals and businesses. A transaction description does not create a tax liability, but it can prevent misclassification and that distinction is critical.
Certain inflows are not income and should not attract tax when accurately narrated. Transfers between your own accounts are movements of personal funds, not earnings, and should be clearly described as such. Loans and loan repayments represent obligations rather than profit and should be identified accordingly. Reimbursements and refunds are simply returns of expenses already incurred.
Capital contributions or owner funding reflect personal funds injected into a business, not revenue. Genuine personal gifts and family support are not taxable income. Reversals and returned funds are corrections, not earnings. Occasional sales of personal effects outside a business context also do not constitute taxable income when properly described.
In contrast, vague wording can invite unnecessary attention. Generic descriptions such as payment, cash, transfer, service, job, or business may easily be interpreted as income unless there is sufficient clarity to indicate otherwise.
YOU CAN ALSO READ: Tech CEOs Shaping AI’s Future
Nigeria’s new tax direction is not designed to penalise honest taxpayers. It is designed to ensure income is accurately identified and taxed. If your transactions are truthful, clearly described, and supported by basic records, you are already on the right side of compliance.
In this new tax era, clarity is protection. Your bank statement tells a financial story. Make sure it tells the right one. Thoughtful compliance is not about fear, but about understanding the system and positioning yourself wisely within it.
Dr. Alebiosu is an accounting and taxation expert with a strong passion for helping young professionals achieve excellence and discover purpose in their careers. She brings extensive experience across audit, tax, assurance, advisory services, and academia, and has worked on diverse projects spanning both the private and public sectors.
