Obgist | Nigeria News, Celebrity Scoop, International Gist and Tech News

Nigerians are questioning a 10% withholding tax on savings interest as banks enforce deductions amid economic pressure.

Growing frustration is spreading among Nigerians and investors following the enforcement of a 10 percent withholding tax (WHT) on interest earned from savings and short-term investments.

Over the past few days, many affected customers have taken to social media platform X to complain after noticing deductions on interest credited by several fintech banks.

For many savers, the sudden enforcement came as a surprise, raising questions about whether the tax was introduced under Nigeria’s new tax laws that took effect on January 1, 2026.

Is the Tax New or Old?

While some investors believe the deductions are part of the new tax regime, others insist the policy has existed for years but was not strictly enforced.

Records show that in October 2025, the former Federal Inland Revenue Service (now Nigeria Inland Revenue) instructed banks to begin deducting 10% WHT on interest from short-term investments. These investments had previously enjoyed exemptions to boost returns.

Following the rollout of the new tax framework, compliance appears to have increased, especially among fintech platforms bringing the issue into public focus.

Presidency Committee Clarifies

Reacting to the controversy, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, said the tax was wrongly linked to the new laws.

According to him, withholding tax on interest has always existed in Nigeria’s tax framework, questioning why it is now being described as a new policy.

Experts Call for Better Public Education

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said confusion around the tax highlights the need for stronger public education.

He explained that provisions long embedded in the law can feel new when enforcement suddenly improves. 

According to him, inconsistent messaging from tax authorities and government bodies has worsened public misunderstanding.

Dr. Yusuf stressed that clearer communication and unified implementation are essential to restore confidence.

Timing Seen as Insensitive

Also weighing in, Professor Godwin Oyedokun, an accounting and finance expert at Lead City University, described the timing of the enforcement as poorly aligned with Nigeria’s economic reality.

He acknowledged that interest income has always been taxable and that banks are legally required to deduct WHT. 

However, he noted that savings interest rates are already far below inflation, meaning many Nigerians are losing money in real terms.

Deducting tax from such low returns, he said, makes savers feel punished for trying to protect their money rather than grow wealth.

Economic Risks Highlighted

Professor Oyedokun warned that the policy could discourage formal savings and undermine financial inclusion, especially among small savers drawn in by fintech platforms.

He added that without exemption thresholds or graduated rates, low-income savers bear the same burden as wealthy investors, deepening public resentment.

With inflation high, living costs rising, and currency pressure persisting, experts argue that tax policy must balance legality with social sensitivity.

Why the Debate Matters

Analysts agree that while the 10% WHT on savings interest is legal, its current implementation risks weakening trust in the financial system if not properly communicated.

Calls are growing for clearer guidelines, targeted exemptions, and sustained public enlightenment to prevent further backlash.