Nigerian consumers may soon face higher banking and service charges as financial institutions adjust to the compliance demands of the country’s evolving tax regime, raising concerns that the cost of reforms could eventually be transferred to customers.
Speaking on the development, managing consultant at Pedabo, Albert Folorunsho, warned that businesses are likely to pass rising compliance costs down the value chain.
“All of these costs are going to be passed on to the customer, by either the bank that is on-lending to them or whatever the case may be,” he said.
Analysts and operators have expressed concerns that while the reforms are designed to improve revenue collection and encourage investment, they also introduce new compliance obligations that increase operational costs for businesses.
Companies are now expected to integrate tax compliance more directly into their operations, including transaction processing, reporting systems, and documentation requirements.
The reforms are supported by expanded digital reporting obligations, stricter audit mechanisms, and clearer tax treatment rules, especially in the financial and structured lending sectors.
Folorunsho explained that the shift changes how businesses interact with the tax system, making tax compliance part of day-to-day decision-making rather than a periodic obligation.
For banks and financial intermediaries, this means investing in upgraded systems, enhanced reporting frameworks, and stricter compliance processes, all of which come with additional costs.
Nigeria’s tax reform drive is aimed at improving revenue mobilisation. The country’s tax-to-GDP ratio rose to about 13.5 per cent in late 2025 from below 10 per cent in previous years, with authorities targeting 18 per cent by 2027.
Despite the improvement, the figure remains below the 15 per cent benchmark widely considered necessary to adequately fund government functions.
Compared to regional peers, Nigeria still trails behind countries such as Ghana, Kenya, and Senegal in tax revenue performance.
The reforms include measures such as consolidated development levies and targeted tax credits aimed at broadening the tax base while encouraging investment in sectors like infrastructure and energy.
However, experts warn that the additional compliance requirements could lead to higher costs across the economy.
“Costs related to tax compliance will likely be passed to customers by financial intermediaries,” Folorunsho said.
Authorities have also moved to clarify misconceptions surrounding the reforms, particularly concerns that bank account balances or transfers would be directly taxed.
“Tax is not on your account balance. The basis of calculating tax is not bank accounts,” Folorunsho explained.
Olarinde Olufemi, a member of the UN Subcommittee on Environmental Tax, also clarified that taxable income does not include account balances and that business turnover determines small business tax status.
Experts further explained that monetary gifts are not taxable where no service has been rendered in exchange.
“A gift is what you receive without any consideration. If you have just received a gift, it is not liable to tax,” Folorunsho added.
To ease implementation concerns, officials disclosed that more than 30 draft guidance notes are being finalised to simplify compliance under the new tax framework.
However, delays in issuing detailed guidelines have left many firms navigating uncertainty while trying to comply with evolving regulations.
Analysts say the reforms represent a major shift in Nigeria’s fiscal strategy, focusing more on efficiency, compliance, and wider participation rather than increasing tax rates.
Still, many believe the immediate burden of adjustment is likely to be shared across businesses and consumers through higher service charges and operational costs.
