The Federal Government has allayed fears over possible arbitrary deductions from customers’ bank accounts under the new tax regime, assuring Nigerians that the reforms do not authorise financial institutions to impose unauthorised tax deductions.

The Nigeria Revenue Service (NRS) also clarified that the Value Added Tax (VAT) rate remains at 7.5 per cent, dismissing concerns that the new tax framework would automatically impose additional financial burdens on citizens.

Speaking at a stakeholders’ engagement and tax reform sensitisation programme in Kano, the NRS Tax Administrator overseeing Kano, Jigawa and Katsina states, Samaila Abdullahi, said the new tax laws contain specific provisions governing tax assessment, collection and recovery.

Abdullahi explained that the reforms do not grant financial institutions unrestricted powers to deduct money from customers’ personal accounts, stressing that all tax collection procedures must comply with existing legal provisions.

He acknowledged growing concerns among individuals, traders, business owners and other stakeholders over the implications of the reforms, particularly regarding bank transactions, personal loans, family transfers and business income.

According to him, much of the public anxiety surrounding the reforms stems from misconceptions and inadequate understanding of the provisions of the new tax laws.

The tax administrator urged Nigerians to rely on accurate information and official explanations rather than speculation capable of creating unnecessary panic.

He explained that funds received as personal or business loans should not automatically be classified as taxable income, provided such transactions are properly documented.

“For instance, when a trader receives a loan of N500,000, the amount should not automatically be treated as N500,000 in sales or profit, provided the transaction is properly documented,” Abdullahi explained.

He emphasised that proper financial records would help taxpayers distinguish between loans, personal transfers, business turnover and taxable profits, thereby preventing misunderstandings during tax assessments.

Abdullahi further maintained that the new tax framework was designed to improve transparency, strengthen compliance and provide clearer guidelines for taxpayers rather than subject citizens to arbitrary financial deductions.

On the implications for small businesses, he said the Service recognised concerns about the potential tax burden on traders and small-scale entrepreneurs.

He stressed the importance of sustained public enlightenment to enable business owners to understand their obligations, available tax reliefs and the financial records required under the new regime.

Meanwhile, a resource person at the engagement, Abba Sani, who presented a paper titled “Overview of Nigeria’s Tax Reforms and Implications for Taxpayers,” said the NRS was committed to simplifying tax administration and encouraging voluntary compliance.

Sani explained that the sensitisation programme was structured around three critical areas intended to deepen public understanding of the reforms and address challenges confronting taxpayers.

According to him, the first component focuses on explaining the provisions of the new tax laws affecting individuals, companies and businesses, including the applicable VAT rate and other relevant obligations.

He said the second component, titled “From Obligation to Voluntary Compliance: A Practical Guide for Taxpayers,” was designed to provide practical guidance on tax registration, record-keeping, reconciliation of financial transactions, filing of returns and payment procedures.

The third component, “Closing the Compliance Gap: Taxpayer Challenges, Service Delivery and Practical Solutions,” seeks to identify obstacles affecting tax compliance and develop measures to address them.

Sani encouraged taxpayers to report difficulties encountered during registration, digital tax processes, filing procedures and interactions with revenue officials.

He noted that feedback from taxpayers would enable the Service to identify operational challenges, improve service delivery and eliminate conflicting interpretations of tax obligations.

The resource person maintained that effective implementation of the new tax regime would require mutual understanding and cooperation between revenue authorities and taxpayers.

He explained that while the NRS was responsible for providing accurate information, consistent treatment and accessible support services, taxpayers were equally expected to maintain proper financial records, provide accurate information and fulfil their statutory obligations within stipulated deadlines.

He reiterated the Service’s commitment to sustained taxpayer education and stakeholder engagement to ensure that individuals and businesses understand the reforms and comply with the law without unnecessary difficulties.