Banks to Begin 10% Withholding Tax on Foreign Currency Deposit Interest from January 1, 2026

Nigerian banks will commence a 10 percent withholding tax deduction on interest earned from foreign currency deposits starting January 1, 2026, following the implementation of the Nigeria Tax Act, 2025.

The new tax measure was communicated to customers by leading financial institutions, including Access Bank, which outlined key changes that will take effect from the implementation date. According to the bank, the adjustments are in line with current tax regulations and government directives.

Under the revised framework, interest generated from foreign currency domiciliary accounts and other foreign currency deposits will now be subject to a 10 percent withholding tax. The tax will be deducted at source by banks and remitted directly to the Federal Government in accordance with regulatory requirements.

In addition to the withholding tax on foreign currency interest, banks also announced a change to the Electronic Money Transfer Levy. The N50 levy, which was previously charged to recipients on transfers of N10,000 and above, will now be deducted from the sender’s account instead.

The move follows an earlier directive issued on October 29 by the Nigeria Revenue Service, formerly known as the Federal Inland Revenue Service, instructing banks to deduct withholding tax on interest payments from short-term investment instruments. The directive applies to interest payable to individuals, companies, and non-corporate entities, with deductions required at the point of payment.

President Bola Tinubu reaffirmed the Federal Government’s commitment to the tax reform agenda on December 30, stating that implementation would begin as scheduled on January 1, 2026. According to the president, the reforms are designed to strengthen Nigeria’s fiscal system, improve tax compliance, and promote fairness without increasing the overall tax burden on citizens.

Financial analysts note that the introduction of withholding tax on foreign currency deposit interest could influence savings and investment decisions, particularly among high-net-worth individuals and businesses that hold assets in foreign currencies. Customers are advised to review their account structures and seek professional financial and tax advice to understand the impact of the new policy on their earnings.

As Nigeria’s banking and tax landscape continues to evolve, depositors and investors are encouraged to stay informed about regulatory changes affecting interest income, foreign currency accounts, and overall financial planning.