New Tax Framework: No Legal Authority for Direct Bank Debits Without Consent
Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has clarified that neither the current tax statutes nor the newly consolidated tax framework empowers banks or tax authorities to debit customers' accounts without explicit consent or due legal process. Speaking during a stakeholder engagement session as the Nigerian Tax Administration Act (NTAA) transitions into full implementation, Oyedele dismissed circulating reports of automatic tax deductions as misinformation. He emphasized that the sanctity of bank deposits remains protected under existing financial regulations and constitutional provisions.
Clarifying the Scope of the Nigerian Tax Administration Act
The NTAA, which became effective on 1 January 2026, has been at the centre of public debate regarding increased government oversight of personal and business finances. Oyedele noted that while the act mandates a Tax Identification Number (TIN) for individuals and businesses operating income earning bank accounts, this requirement is a tool for compliance monitoring rather than a mechanism for direct fund seizure.
The reporting threshold for commercial banks has been adjusted to focus on high turnover accounts. Under the new guidelines, banks are required to file periodic reports only on accounts with a quarterly turnover of ₦25 million and above. This is an increase from the previous ₦10 million benchmark, a move intended to streamline risk-based tax administration while shielding low-income earners and small scale entrepreneurs from unnecessary administrative scrutiny.
Legal Safeguards and Enforcement Procedures
Addressing concerns over the potential for unilateral withdrawals by the Federal Inland Revenue Service (FIRS) or other agencies, the committee lead outlined the rigorous statutory process required for debt recovery. According to the Presidential Committee, the government must follow a structured hierarchy of enforcement:
Formal Assessment: Taxpayers must first receive an official assessment of liability.
Notification and Objection: Individuals retain the right to contest assessments within a statutory window.
Judicial Intervention: If a default persists, the government must obtain a garnishee order from a court of competent jurisdiction.
"The only existing mechanism that allows recovery from bank accounts is a court ordered garnishee," Oyedele stated, describing it as a lengthy legal process that is rarely utilized. He further clarified that banks cannot act as collection agents for the state unless a taxpayer’s liability has been conclusively established through these formal legal channels.
Economic Impact and Investor Confidence
The clarification comes as a measure to prevent panic within the financial sector. Experts suggest that misinformation regarding direct debits could trigger mass withdrawals, potentially destabilizing the banking system. By reaffirming that account owners must consent to transactions or be subject to a transparent court order the government aims to bolster investor confidence and encourage financial inclusion.
Additionally, the reform committee highlighted that for the majority of Nigerians, the new tax regime offers relief rather than additional burden. This includes the exemption of workers earning ₦800,000 or less annually from Personal Income Tax and the zero-rating of Value Added Tax (VAT) on essential goods such as food, education, and healthcare.
As the 2026 fiscal year progresses, the Federal Government is expected to deploy more digital explainers to bridge the information gap. The success of these tax reforms hinges on the balance between broadening the tax base and maintaining the trust of the banking public. For policymakers and financial institutions, the priority remains the seamless integration of TIN requirements without disrupting the operational autonomy of private bank accounts.
