- Banks in Nigeria now deduct a 10% withholding tax from interest earned on foreign currency savings accounts under the Nigeria Tax Act 2025
- The tax applies to domiciliary accounts in dollars, pounds, and euros and is automatically taken when interest is paid to customers
- Interest from federal and state government bonds remains exempt, and banks say the deduction is a government requirement, not a bank fee
Legit.ng journalist Victor Enengedi has over a decade’s experience covering energy, MSMEs, technology, banking and the economy.
Banks in Nigeria have clarified that a 10% tax is now being deducted from the interest customers earn on foreign currency savings accounts, such as dollar, pound, and euro accounts.
This follows complaints from customers who noticed that their interest payments were lower than expected, The Sun reported.
Source: UGC
The deduction is based on the Nigeria Tax Act 2025, which took effect on January 1, 2026, and applies to interest on dollar and other foreign currency accounts held by customers.
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Under this law, interest earned on domiciliary (FX) accounts is now taxed in the same way as interest on naira savings.
Banks say it’s a government policy
Financial institutions, including Access Bank, have informed customers that the tax is automatically deducted at the point the interest is paid.
They emphasised that this is not a bank charge but a government-mandated withholding tax.
Access Bank clarified:
“A 10 per cent withholding tax now applies to interest earned on foreign currency deposits and is deducted at the time the interest is paid, effective January,1, 2026, as required by the new Nigeria Tax Act 2025. Interest on Federal and State Government Bonds remain exempt.”
For example, if a customer earns $100 as interest, $10 will be deducted as tax, leaving the customer with $90. The deducted amount is then forwarded to the relevant tax authorities.
To reduce confusion, banks have stepped up communication through emails, text messages, and app notifications to explain how the deduction works.
Recall that banks earlier began to also notify customers about a 10% withholding tax on interest earned from fixed-income securities.
What it means for savers and investors
Experts say the move is unlikely to significantly change how people use foreign currency accounts, as many Nigerians keep such funds mainly to protect against exchange rate fluctuations rather than to earn high returns.
However, some investors may begin to explore other options like Eurobonds or money market instruments in search of better returns.
It’s also important to note that interest earned on federal and state government bonds is still exempt from this tax.
Overall, banks say their focus is on staying compliant and keeping customers informed, as the new tax becomes a regular part of account statements.
Source: Getty Images
CBN scraps card maintenance fees
Meanwhile, Legit.ng earlier reported that the CBN scrapped card maintenance fees, benefiting millions of banking customers in Nigeria
According to the CBN, banks are no longer allowed to charge maintenance fees on Naira-denominated debit and credit cards.
While some charges have been removed, the cost of issuing or replacing debit and credit cards has been increased from N1,000 to N1,500.
Source: Legit.ng