Analyst Clarifies New Tax Law: Taxation Applies to Income, Not All Bank Inflows
In a detailed discussion on recent fiscal reforms, economic analyst Kalu Aja has provided crucial clarification on Nigeria’s new tax framework, which took effect on January 1, 2026. Speaking during a Nairametrics X Space titled “How the new tax law affects your pay, business and daily spending,” Aja addressed widespread public concerns, emphasizing that not all money entering a bank account is subject to tax.
Aja explained that the core principle remains that only income is taxable. He defined income broadly to include salaries, business profits, interest, digital earnings, and other gains, particularly for individuals and SMEs. However, he was emphatic that several specific inflows are not considered income. “If I borrow money from a bank, the money coming into my account… is a loan. So it’s not income,” he stated. Similarly, gifts and inheritances are not classified as taxable income.
The most significant shift, according to Aja, is the removal of automatic tax reliefs. Previously, taxpayers received standard deductions regardless of filing. Now, the onus is on individuals to declare their income and applicable exemptions through proper filing. “They’ve changed the structure. It puts the onus on you, the taxpayer, to go out and buy exemptions. Otherwise, you expose that income to taxation,” Aja noted. This change makes accurate self-reporting the key legal safeguard.
Aja warned that the primary risk under the revised framework is failure to file returns. While authorities may observe account inflows, they cannot arbitrarily withdraw funds. However, if a taxpayer does not file, the agency may assume all inflows are income. “When you file, that’s when they can decide if they agree with your filing or challenge it,” he said. This underscores why, just as Tinubu demands urgent action on economic matters, taxpayers must urgently prioritize compliance.
In summary, Aja clarified that the law does not introduce new personal taxes but tightens compliance by eliminating automatic reliefs. The discussion around these reforms continues amidst broader national conversations, such as when Atiku says 2025 will be pivotal for policy review and as various groups look toward 2027. For investors monitoring the NGX top 10 performers or citizens planning their finances, understanding the distinction between income and mere bank inflows is now more critical than ever.
