Banks to begin 10% withholding tax deduction on foreign currency deposits interest

Nigerian banks will start deducting a 10 percent withholding tax on interest earned from foreign currency deposits from January 1, 2026.

Access Bank, in an email to customers on Wednesday, outlined changes that will apply to banking transactions from the effective date.

The financial institution said the deduction aligns with the Nigeria Tax Act, 2025.

“Electronic Money Transfer Levy (N50): Previously charged to the Recipient on transfers of N10,000 or more, this charge will now be deducted from the Sender’s account,” the email reads.

“Withholding Tax on Foreign Currency Deposits Interest: Interest earned on FCY deposits will now attract a 10% withholding tax.

“Please be assured that all applicable taxes will be duly remitted to the Federal Government in line with regulatory requirements.”

On October 29, the Nigeria Revenue Service (NRS), formerly Federal Inland Revenue Service (FIRS), directedbanks to deduct withholding tax from all interest payments on short-term investment securities.

The agency said the tax must be deducted from interests payable to any person, including non-corporate entities, on the date of payment.

On December 30, President Bola Tinubu said implementation of the tax reform laws will commence as scheduled on January 1, 2026.

In a statement, Tinubu said the reforms are a once-in-a-generation opportunity to build a fair, competitive, and robust fiscal foundation, and they are not designed to raise taxes. (The Cable)