Deduction of 10 Percent Withholding Tax on Savings Interest Sparks Outrage Among Nigerian Savers and Investors
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Nigerians and investors are expressing growing frustration over the enforcement of the 10 percent withholding tax on savings interest, as banks and fintech platforms begin deducting the charge on earnings from savings and short-term investments.
Over the past three days, many affected investors have taken to social media, especially X, to vent their displeasure over the deductions.
Findings show that several investors believe the withholding tax on savings interest is connected to the new tax laws that took effect on January 1, 2026. Others, however, insist that the policy existed before the new tax regime and is only now being actively enforced.
Recall that in October 2025, the then Federal Inland Revenue Service (FIRS), now the Nigeria Inland Revenue Service (NIRS), directed banks to begin collecting a 10 percent withholding tax on interest earned from short-term investments. These investments had previously enjoyed exemptions aimed at encouraging better returns for savers.
With the introduction of the new tax laws, some banks, particularly fintech institutions, have commenced strict enforcement of the withholding tax on savings interest. This development has further fueled public anger, with many investors describing the timing as unfair given the current economic situation.
Reacting to the tax issues, Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, clarified that the withholding tax on savings interest was not introduced by the new tax laws.
Oyedele said, “Withholding tax on interest has always been in the law. Why is it being attributed to the new law?”
Also speaking, Dr. Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said the confusion highlights the need for increased public education. He explained that higher compliance levels may make existing provisions appear new, adding that contradictions in pronouncements by tax authorities and government bodies are worsening public uncertainty.
A professor of accounting and finance at Lead City University, Godwin Oyedokun, described the implementation of the withholding tax on savings interest as insensitive. He noted that while the tax is legal, savings interest rates in Nigeria are already low and far below inflation, making the deductions feel punitive to ordinary Nigerians.
Oyedokun warned that the policy could discourage savings within the formal financial system and undermine financial inclusion. He added that without exemptions for small savers and clearer communication, the withholding tax on savings interest risks damaging public trust at a time of severe economic hardship.
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