A wave of public frustration has followed the deduction of a 10% Withholding Tax (WHT) on interest earned from savings and short-term investments by some Nigerian banks, particularly fintechs.
While the Federal Inland Revenue Service (now Nigeria Inland Revenue) directed this enforcement in late 2025, the recent implementation has led many to incorrectly attribute it to the new 2026 tax laws.
Fiscal policy experts clarify that the tax is not new, but its timing and impact are economically sensitive. Critics argue that the deduction from already low, inflation-eroded returns penalizes small savers and could discourage formal financial inclusion.
Key Points
The deductions directly reduce the real returns for millions of savers, further diminishing the value of interest income in a high-inflation environment.
It risks undermining financial inclusion by making formal savings less attractive, potentially pushing small depositors toward informal cash holdings.
The confusion highlights a significant communication gap between tax authorities, financial institutions, and the public regarding existing tax obligations.
Experts criticize the policy’s lack of a threshold to protect low-income savers, describing it as insensitive amid current economic hardships.
The situation tests public trust in the tax system and reveals tensions between enforcing compliance and designing socially responsive policies.
Resolving the outcry requires clearer communication from authorities and potentially revisiting the policy’s structure to protect vulnerable savers while maintaining tax compliance.
Sources: Daily Post, Vanguard
