Nigeria’s tax laws: Where does bank transfer narration stand?

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Since the new tax law took effect in January 2026, the Nigerian internet space has been flooded with claims that bank transfers made without a narration, or with “incorrect” narration, could result in automatic tax deduction. 

The posts (here, here, and here) assert that Nigerians should be careful about what they write when making transfers, suggesting that tax authorities are now monitoring narration and using it as a basis for taxation.

This claim has generated widespread fear, confusion, and anxiety among bank users. 

As part of DUBAWA’s media and information literacy project, we are dissecting whether narration has a place under the new tax reforms, amidst other issues. 

What is a bank narration?

It is important first to clarify what a bank narration actually is.

In simple terms, a bank narration is a short description attached to a transfer that explains its purpose. Examples include “Rent for July,” “School fees,” or “Loan repayment.” 

Narrations help both the sender and the recipient identify the intended purpose of a transaction when reviewing bank statements. 

They are mainly for personal record-keeping, dispute resolution, and basic financial clarity. Importantly, narrations are not, by themselves, a tax classification tool.

Narrations and Taxes: Sorting facts from fiction 

Contrary to claims circulating online, no provision in Nigeria’s new tax laws links bank transfer narrations to automatic tax deductions. 

Government officials have repeatedly dismissed the idea that tax authorities are monitoring narrations or debiting accounts based on how a transfer is described.

Taiwo Oyedele, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has publicly described these fears as baseless. 

According to him, no system in place allows tax authorities to automatically deduct money from individuals’ bank accounts based on transfers or their narrations. 

He clarified that Nigeria’s tax reforms are not designed to turn banks into tax enforcement agents that inspect everyday transactions. 

Our findings indicate that the principle of self-declaration is at the core of Nigeria’s tax framework, including the Nigeria Tax Act of 2025.

This means taxes are assessed based on declared income, such as salaries, business profits, rent, dividends, and other clearly defined sources of earnings. Taxes are not charged on every inflow or outflow of money in a bank account.

DUBAWA spoke to Arome Adaji, a finance specialist with the Centre for Journalism, Innovation and Development (CJID).

He explained that everyday transfers, such as sending money to family members, repaying friends, contributing to group savings, or moving funds between personal accounts, are not taxable events in and of themselves. 

“Receiving money does not automatically mean it is income, and the law does not treat all bank inflows as taxable unless they fall within defined income categories,” he said.

Another important point is that tax authorities cannot debit accounts at will. Even where taxes are due, the process typically involves assessments, notifications, and compliance procedures. 

We found that automatic debiting of personal accounts without notice or legal backing is not permitted under Nigerian law.

Additionally, the chairman of the Nigeria Revenue Service (NRS), Zacch Adedeji, stated that no tax authority, whether at the Federal or State level, has the legal power to access or debit personal bank accounts simply because money was transferred or based on the description attached to that transfer. 

According to him, “Any tax collection process must follow due process as outlined in law.”

However, there is one charge many Nigerians often confuse with tax deductions: stamp duty. Certain electronic transfers are subject to a N50 stamp duty charge. This is not an income tax and has nothing to do with narrations. 

Stamp duty is a transaction-based levy applied by banks on qualifying electronic transfers, as provided for by law. 

In practice, it applies to electronic deposits or transfers of N10,000 and above made into a bank account, whether through mobile banking apps, USSD, or online transfers 

The bank charges this amount at the point of transaction, not the tax authority, and it applies regardless of what is written in the narration.

Conclusion 

Our research shows that claims that Nigerians will be taxed or have their accounts debited because they failed to include a narration or used the “wrong” narration are false. A review of official statements and an interview with a tax expert indicate that the new tax laws do not give tax authorities the power to monitor or penalise individuals based on transfer descriptions.