Nigerians and indeed many middle-level business owners are currently at their wits end to evade taxes on the bank transfers in the country as a result of the new Tax Law.
WITHIN NIGERIA gathered that few days into January 2026, many Nigerian business owners have asked their customers to use narrations like “gift” “school fees,” “medicine”, and other misleading narrations to avoid possible tax deductions in their accounts.
Our reporter went round some towns in Enugu to see what the business owners have to say on the matter.
Julius Onyeke is a renowned patent medicine dealer at Enugu road, Nsukka, Enugu state.
He told our reporter that ” I have to tell my customers to always write “gift” or “mama’s upkeep” in their narrations while transferring money for their purchase in my shop. Not only that when using my POS, I also write such narrations.”
According to Mr. Onyeke, ” I started doing since January 1 when I heard rumours that Federal government will tax payments for good and services based on narrations attached to bank transfers.”
Asked if there is any specific amount such misleading narrations will be attached, he explained that ” any amount from N5,000, will be written gift. But if it is above N10,000, I usually tell them to write “upkeep”.
However, WITHIN NIGERIA findings showed that Mr. Onyeke is not alone in these misleading narrations.
Ginika Odo is a Point-of-Sale (POS) agent in Ibagwa-Aka, Igbo-Eze South local government area.
She told our reporter that ” they told us that if someone is buying something from you, it is better to write ‘gift’ as narration. According to them, when government wants to remove tax from your money, they will not touch it. They will see it that it is not salary but a gift from someone else.”
Explaining further, Odo told WITHIN NIGERIA that, “the same thing applies to when your parents send you some amount like N50,000 for foodstuff or allowance, it is better to add ‘foodstuff’ or ‘gift’ as narration so the government will see it that it is not income.”
Odo told our reporter that as a POS attendant, she gets more than ₦500,000 a month. Highlighting her fear, she stated that she didn’t know what will happen after six months. “Will they remove tax from that money? And on days I receive gifts, will they also remove tax from that money, thinking it was income?” she asked.
The experiences of Julius and Ginika reflect a growing disturbing practice among Nigerian business owners and informal sector workers who believe that bank transfer narrations determine whether a transaction is taxable.
When our reporter visited a popular private school at Obollo-Afor, Udenu local government to know how their salaries were paid for the month of January, the administrator who spoke under the condition of anonymity told WITHIN NIGERIA that the teachers were mandated to open salary accounts with a popular Microfinance bank in the area.
“To avoid all these hullabaloos, we asked our teachers to open salary accounts with a Microfinance bank in this area. What I did was to lodge their salary into the account of the school. I just issue a cheque covering the salary amount and the bank will credit their individual salary accounts.”
Narrating further, the administrator told our reporter that he didn’t want to go through the rigorous process transferring money into their accounts all the time as before.
In any case, it was gathered that the misconceptions about transfer narration join a stream of misinformation that has clouded the New Tax Act, 2025 (NTA), since its announcement in 2025.
WITHIN NIGERIA gathered that the Tax Act is a comprehensive legislation that consolidates and replaces several existing tax laws, including the Companies Income Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Value Added Tax Act, Petroleum Profits Tax Act, and Stamp Duties Act.
The Act which has been followed by criticism and controversy was signed by President Bola Ahmed Tinubu into law on June 26, 2025 and took effect on January 1, 2026.
Though the process began in July 2023 with the creation of the Presidential Committee on Fiscal Policy and Tax Reforms, led by Taiwo Oyedele, it has been a tortuous process ever since then.
By and large another claim that spread like wildfire is the notion that starting in January 2026, Nigerians earning ₦800,000 and above annually will be required to pay 20 per cent personal income tax, under President Bola Tinubu’s new tax reforms.
But WITHIN NIGERIA checks showed that under the new Nigeria Tax Act 2025, individuals earning ₦800,000 or less per year are fully exempt from personal income tax.
The progressive rates start at 15 per cent for incomes above that threshold, with the highest 25 per cent rate applying only to incomes above ₦50 million.
Transaction narration and new tax law
However, a transaction narration can be seen as a short description attached to a bank transfer or payment. It is also commonly used to indicate the purpose of a transaction, such as payment for goods, services rendered, loan repayment, or gifts. While narrations may help the sender and recipient understand a transaction.
Shocking revelation showed that they do not determine the tax treatment of the funds involved.
To this effect under Nigerian tax administration, transactions are assessed based on their economic substance rather than the wording used in bank transfer descriptions.
Though there have been claims that Nigeria’s new tax regime allows authorities to deduct taxes automatically based on bank transfer descriptions are unfounded.
A review of the country’s tax laws shows that transaction narrations play no role in determining whether a transfer is taxable.
Officials involved in shaping the reforms have consistently rejected the notion that tax agencies are tracking or analysing transfer descriptions to impose deductions.
They say no mechanism permits tax authorities to monitor individual bank transactions or debit accounts simply because a transfer is labelled as a payment for goods or services.
Taiwo Oyedele is the Chairman Presidential Committee on Fiscal Policy and Tax Reforms. He has addressed the concern publicly, describing it as a misconception.
According to Oyedele, Nigeria does not operate a system where taxes are automatically pulled from personal bank accounts based on transfer activity or wording.
In his words during an intereactive session on Channels TV recently he said that “there is no tax man in the world that has the capacity to go after everyone.”
Oyedele stated that ordinary bank users should not worry about how they describe transfers.
“Any amount of money you transfer, whether it’s $1 billion, whether it’s $1,000, it doesn’t matter how you describe it.”
“Nobody will debit your bank account. At the end of the year, you tell the government yourself,” he said.
He went further to stress that “You know the amount that is your income. You know the one that is not your income.
“So you tell the government, this is my income, and here is the tax. If you’re exempted, you don’t need to pay any tax. Just say this is my income, and I’m exempted from tax.”
Oyedele further noted that the ongoing tax reforms do not assign banks the role of policing everyday financial transactions on behalf of the government. Instead, the tax system relies on established assessment processes.
An examination of the Nigeria Tax Act 2025 shows that taxation is built around voluntary disclosure and formal assessment. Individuals and businesses are taxed on identifiable income streams such as wages, business earnings, rent, dividends, and similar sources not on the mere movement of money in and out of bank accounts.
As such, routine transfers, gifts, and internal movements of funds do not, by themselves, trigger tax liabilities under Nigeria’s current tax framework.