The Presidential Fiscal Policy and Tax Reforms Committee has clarified that Nigerian banks cannot directly debit customers’ accounts for taxes without their consent.
Chairman of the committee, Mr. Taiwo Oyedele, said tax authorities do not have the legal power to withdraw funds from personal accounts. His remarks followed media reports suggesting that the Lagos State Government planned to debit accounts of taxpayers who default on payments.
Oyedele described the reports as misleading and explained that Nigerian tax law provides for a “power of substitution,” not direct withdrawal.
“The power of substitution allows the tax authority to ask a third party to pay a confirmed and unpaid tax debt of a taxpayer who refuses to settle it. This can only happen after all legal and administrative steps, including court appeals, are exhausted,” Oyedele said.
He emphasized that the power of substitution is tightly regulated and used as a last resort. “It is not an arbitrary or routine action. It applies only after enquiries, assessments, objections, notices, and appeals have been concluded and the debt is legally due,” he said.
Oyedele also assured that low-income earners and small businesses below the taxable threshold are not affected by this measure. “Most low-income earners and small businesses do not fall into this category under the new tax laws,” he explained.
Highlighting global practice, he noted that similar mechanisms exist in other countries, allowing authorities to recover confirmed tax debts through third parties.
“The purpose of this power is to ensure fairness. Without enforcement tools, honest taxpayers bear the burden while defaulters are encouraged, putting pressure on government finances,” he said.
He outlined safeguards to prevent abuse, including rights of objection and appeal, due process in assessment, and oversight by the Office of the Tax Ombud.
Oyedele urged Nigerians to seek accurate information and avoid being misled by reports suggesting tax authorities can arbitrarily access bank accounts. “This is a controlled tool to ensure the tax system is fair and that confirmed debts are paid,” he said.