Cashless Economy at Risk as Tax Reform Takes Effect 2026

Nigeria’s ambitious drive toward a cashless and digitally powered economy is now facing a silent but growing threat: tax reforms. With the implementation of the new Tax Reform Law effective January 2026, experts warn that hidden charges linked to transfers, telecom services, and bank transactions could derail the very progress the country has made in expanding its digital financial ecosystem.

The Federal Government, under mounting pressure to raise revenue amid dwindling oil earnings, has expanded its tax net to cover more digital transactions. The new framework introduces Value Added Tax (VAT) on electronic money transfers, tighter enforcement of stamp duties on deposits, and broader levies on telecom-related services powering mobile transfers.

For ordinary Nigerians, especially those dependent on micro-transfers and daily transactions, the impact is immediate. Small charges on every transfer—once dismissed as negligible—are now accumulating into significant deductions. Businesses and individuals alike are questioning whether the costs of staying cashless outweigh the convenience.

The cashless policy was first rolled out by the Central Bank of Nigeria (CBN) in 2012 to reduce dependency on cash, curb illicit flows, and improve financial inclusion. Over the years, fintechs and telecoms joined forces with banks to expand digital payment access to millions. During the 2020 COVID-19 lockdowns, electronic transfers surged, proving the resilience and importance of digital finance.

Yet, Nigerians complained about “too many deductions.” Banks pointed to regulatory obligations, while telecoms argued that infrastructure costs had to be recovered. Regulators often had to intervene to calm tensions.

The 2026 Reality
With the new reform now in motion, experts are raising red flags.

• Dr. Tunde Amodu, an economist and tax consultant, noted: “Tax reforms are vital for sustainable revenue, but the structure must not discourage adoption of digital channels. If transfer costs become unbearable, we risk reversing years of progress in financial inclusion.”
• Fintech analyst also, warned that: “Nigeria’s innovation in mobile payments could stall if small businesses and low-income earners retreat to cash. It’s not about big corporations, it’s about the market woman who sends ₦2,000 daily to suppliers and now pays charges that eat into her profit.”
• A senior telecoms executive, who requested anonymity, explained: “We are caught between government levies and customer resistance. If reforms don’t consider affordability, the ecosystem will lose trust.”

Nigeria’s march toward a $1 trillion economy depends on digital transformation and financial inclusion. But experts caution that balancing tax collection with innovation is critical. Policymakers must weigh fiscal sustainability against consumer trust in digital systems.

If unchecked, the rising cost of digital transactions could push millions back into the informal, cash-heavy economy—undermining the very reforms meant to strengthen Nigeria’s financial future.

The question that now lingers is whether Nigeria can find that delicate balance, ensuring that its tax ambitions do not suffocate the promise of its cashless economy.

Nigeria’s 2026 Tax Reform Law introduces VAT and levies on digital transfers, raising concerns among experts about hidden costs threatening the cashless economy. Can Nigeria balance tax revenue with financial inclusion?