Nigerians and investors have expressed growing frustration over the implementation of a 10 percent withholding tax (WHT) on interest earned from savings and short-term investments following recent deductions by several banks, particularly fintech institutions.
Over the past few days, affected customers have taken to social media, especially X, to complain after noticing the 10 percent tax deducted from their interest earnings. While some believe the deductions stem from Nigeria’s new tax laws that took effect on January 1, 2026, others argue that the policy predates the new tax regime.
Recall that in October 2025, the Federal Inland Revenue Service now Nigeria Inland Revenue directed banks to begin collecting 10 percent WHT on interest earned from short-term investments which had previously enjoyed exemptions to encourage savings. However, enforcement appeared limited until recently when compliance increased across the banking sector.
Reacting to the controversy, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, clarified that the withholding tax on interest was not introduced by the new tax laws. He stressed that the provision had always existed in Nigeria’s tax framework questioning why it was being attributed to recent reforms.
Similarly, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, attributed the backlash to weak public education and inconsistent communication by tax authorities. He noted that improved compliance could give the impression of a new tax while contradictions in official pronouncements have further confused the public.
Also weighing in, Professor Godwin Oyedokun of Lead City University described the timing of the enforcement as insensitive given Nigeria’s current economic hardship. While acknowledging the legality of the tax, he warned that deducting 10 percent from already low interest rates far below inflation penalises small savers and could discourage formal savings.
Oyedokun added that without exemptions for low-income earners or graduated thresholds, the policy risks undermining financial inclusion, savings culture, and public trust in the tax system at a critical economic moment.
