The new cash withdrawals limit will have tax implications especially for individuals and MSMEs.

As many people will be forced to carry out transactions using electronic payments, small businesses that currently operate mostly on cash will become visible to the tax authorities.

This will trigger various tax obligations including:

Income tax

If your business is registered as a company you may be liable to CIT depending on your annual turnover (i.e. no CIT if your turnover below N25m, 20% if your turnover is between N25 to N100m, 30% if your turnover is more than N100m) in addition to Education Tax at 2.5%.

If your business is not registered as a company then you will be liable to personal income tax based on graduated taxable income bands between 7% and 24%.


All businesses are required to register for VAT and charge 7.5% on their goods and services except those with annual turnover below N25m.


All employees earning more than N30,000 per month are liable to PAYE which must be deducted and paid to the tax authority by the employer on a monthly basis. You may also be liable to other statutory contributions such as pension depending on your staff strength.


The more transactions you make electronically the more the tax authorities will get the intelligence to track your income and net worth making it easier to fish you out if you are a tax evader.

What to do

If you’re a small business owner, you need to take some steps now:

1. Register with the relevant tax authorities (FIRS and the State Internal Revenue Service where you operate)

2. Open a separate bank account for your business (or dedicate one for that purpose if you already have a business account) and don’t mix business with personal transactions.

3. Government on its part needs to sensitize the general public especially small business owners, and the CBN should ensure a proper handshake with the fiscal authorities. For instance, the conditions for excess cash withdrawals could include Tax Identification Number.


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