The Nigeria Revenue Service (NRS) has clarified the taxation policy regarding savings accounts, stating that only the profits or interest earned on these accounts will be subject to tax, not the principal savings. This announcement seeks to allay fears among Nigerians regarding potential taxation of their entire savings.

According to the NRS boss, the government's focus is on taxing income generated from savings, aligning with standard tax practices. This means that individuals will only be taxed on the interest accrued on their savings, and not on the actual amount deposited in their accounts. This comes as the government looks to increase revenue generation to fund its budget.

The NRS emphasized that this measure is not a new tax but a clarification of existing tax laws applied to various forms of income, including interest from savings. The goal is to ensure fair taxation of earnings while encouraging a savings culture among citizens.

The tax authority is expected to release detailed guidelines on how the tax on savings profits will be implemented. Market watchers believe this clarity will boost confidence in the banking sector, encouraging more Nigerians to save and invest through formal channels. This is especially important for small businesses and individuals who rely on savings accounts for financial security.

In a related development, the NRS is also working on simplifying the tax payment process through digitalization. The agency aims to make it easier for taxpayers to comply with their obligations, further enhancing revenue collection efficiency.