For Nigerian fintechs, the venture capital winter was just the first cold front. Now, the taxman has arrived, and he’s brought friends.

Just as the country’s celebrated tech sector was getting cozy with a clever new funding source — the local public debt market — the government has unleashed a two-pronged assault. One blow comes from the tax authority, the other from the securities regulator. The “easy money” party, it seems, is officially over, and the cleanup crew is demanding its cut.

The Gospel of Tax (and Aggressive Judgement)

The most direct shot came from the Federal Inland Revenue Service (FIRS) this week. In a new directive, the agency has mandated that banks and financial institutions deduct a 10% withholding tax (WHT) on interest earned from short-term securities.

This new rule targets the very instruments fintechs had come to love: treasury bills, corporate bonds, and commercial papers. For years, these were tax-exempt to “encourage” investor participation. So much for encouragement.

This isn’t just a minor tweak. It’s a core plank in Nigeria’s new, desperate fiscal gospel. Signed into law in June 2025, the government’s reforms aim to drag the country’s abysmal tax-to-GDP ratio from sub-10% to an ambitious 18% within three years.

The commandments are written in the language of progressive taxation:

• Personal Income Tax (PIT): A new ₦800,000 tax-free threshold, but higher bands quickly ramp up, with a mid-level software developer on ₦6m ($4,000) a year facing a new, unavoidable ₦930,000 tax bill.
• Digital & Capital Gains: Crypto traders and startup investors, look busy. Net gains from digital assets and capital market sales are now firmly in the taxman’s sights.
• Diasporan Duty: Spend over 183 days in Nigeria, and you’re a tax resident, liable on your global income.

But it’s the enforcement that has the ecosystem spooked. Lacking clear data, tax authorities are increasingly using “Best of Judgement” (BOJ) assessments — a tactic where they essentially guess a taxpayer’s liability based on their perceived lifestyle.

As Taiwo Oyedele, head of the presidential committee on fiscal policy, recently commented: “If you refuse to declare, the government will track the movement of the money… and impose tax on it.” For founders, the message feels ominous: open your books, or we’ll make a number up.

The End of the CP ‘Open Season’?

This tax blitz is colliding with a market that was already in turmoil.

As VC funding cratered — falling from a heady $1.2bn in 2022 to just $156.6m in the first half of 2025, according to Launch Base Africa — fintechs needed cash. They found it in the local commercial paper (CP) market.

Digital lender FairMoney was the undisputed poster child. In August 2024, its CEO Laurin Hainy celebrated a ₦1.69bn raise as a “testament to our financial strength and market confidence.” It was the peak of the CP “open season.”

Then the regulators stepped in.

Alarmed by the frenzy, the Securities and Exchange Commission (SEC) and the National Pension Commission (PenCom) introduced new guidelines in April 2025. The new rulebook effectively ended the party:

• Minimum Equity: Issuers now need ₦500 million in shareholders’ equity.
• Credit Rating: Only companies with an investment-grade rating can play.
• Bank Backing: A commercial bank must act as the issuing agent, ironically linking “disruptive” fintechs back to the very institutions they sought to bypass.
• The Killer: PenCom flat-out prohibited pension funds from investing in non-bank CPs, cutting off a massive, stable source of capital.

Into this newly constrained and regulated market, the FIRS dropped its 10% WHT bombshell. It is a classic double whammy.

The days of using CPs as a quick alternative to a Series A are probably measured now. Last month, Payaza, a local payments fintech, signaled a changing of the guard, announcing it had successfully repaid its ₦20.3 billion ($13.6 million) commercial paper.

Payaza’s CEO, Seyi Ebenezer, celebrated it as a victory for “discipline, a great team, and good governance,” noting the company had won creditor confidence by “demonstrating sound risk management practices.”

As 2026 approaches, the government’s fiscal gospel is clear, but its methods are causing alarm. Investors, founders and skilled tech workers are globally mobile. If the cost and complexity of doing business in Nigeria become too high, they will leave.