Nigerians and investors have expressed growing frustration over the enforcement of a 10 per cent withholding tax (WHT) on interest earned from savings and short-term investments, following deductions by several banks and fintech platforms.
Over the past few days, aggrieved customers have taken to social media, particularly X, to protest the deductions, which many initially linked to the new tax laws that took effect on January 1, 2026.
However, findings show that the WHT on interest income predates the new tax regime. In October 2025, the Federal Inland Revenue Service—now Nigeria Inland Revenue—directed financial institutions to begin collecting a 10 per cent WHT on interest earned from short-term investments that had previously enjoyed exemptions.
Despite this, enforcement had been largely inconsistent until recently, with several fintech banks now fully implementing the deductions, triggering public backlash.
Reacting to the controversy, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, clarified that the WHT on interest was not introduced by the new tax laws. “Withholding tax on interest has always been in the law. Why is it being attributed to the new law?” he said.
Also speaking, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the confusion stems from increased compliance rather than new legislation, stressing the need for clearer public education and consistent messaging by tax authorities.
“There were provisions that people were not complying with before. Now that compliance has improved, it appears new, but contradictions in official pronouncements are worsening public misunderstanding,” Yusuf said.
A professor of accounting and finance at Lead City University, Godwin Oyedokun, described the timing of the enforcement as insensitive, given Nigeria’s economic challenges, including high inflation and rising living costs.
He noted that while the tax is legally justified, low savings interest rates mean many Nigerians already lose value in real terms, making the deduction feel punitive rather than progressive.
Oyedokun warned that the policy could discourage savings and weaken financial inclusion, urging government to consider exemptions for small savers, graduated tax structures for larger investors, and stronger public communication to restore confidence.
