The Nigeria Revenue Service (NRS) has moved to clear public confusion around value-added tax (VAT) and banking services, stressing that the new Nigeria Tax Act did not introduce VAT on everyday bank transactions. The clarification comes amid widespread reports, some shared on social media and in local news, suggesting that customers would begin paying new VAT charges on banking activities such as transfers and mobile banking. The revenue agency branded these claims as inaccurate and misleading.
In an official statement, the NRS, which replaced the Federal Inland Revenue Service (FIRS) after reforms under the Nigeria Revenue Service (Establishment) Act, 2025 emphasised that VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime. It added that “the Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard.”
What This Means for Bank Customers
The NRS made clear that VAT only applies to the fees banks charge for specific services, not to the actual money customers transfer, withdraw, or receive. According to officials, the tax is levied on service charges such as transfer fees, USSD transaction charges, card issuance fees, and account maintenance fees. It does not apply to the amount being moved or held in an account. For example, if a bank charges ₦100 for a transfer, the 7.5 % VAT is levied only on that service fee, not the transferred amount itself.
This clarification was issued in response to notices from banks and financial technology platforms informing customers that beginning January 19, 2026, a 7.5 % VAT on certain electronic banking charges would be collected and remitted to the NRS. Some customers interpreted these notices as indicating the introduction of a new tax. However, the NRS has stressed that the tax itself is not new, what has changed is enforcement and uniform compliance across financial institutions.
Common Misunderstandings Addressed
Officials also took the opportunity to dispel several related misconceptions:
Interest earned on savings accounts, fixed deposits, and other interest-bearing accounts remains exempt from VAT because interest isn’t considered a supply of goods or services.
Basic food items, essential goods, medical services, and core educational services continue to be exempt from VAT under the Nigeria Tax Act, protecting consumers from additional tax burdens on necessities. The 7.5 % VAT applies to the service charge only, not the funds being transferred, withdrawn, or deposited, a key distinction the NRS emphasised to counter misunderstandings.
Why the Confusion Emerged
The latest round of confusion stemmed from email and SMS notices issued by banks and payment platforms informing customers that VAT on electronic banking services, including mobile transfers and USSD transaction fees would soon be collected and remitted to the tax authority. Although technically accurate, these messages were widely misconstrued as signifying the introduction of a new tax liability on the public. The Nigeria Revenue Service insists this is not the case and reiterated that the VAT regime has long covered these kinds of service charges.
Government Action on Enforcement
The clarification underscores the government’s push to ensure tax compliance across the financial sector. Banks, microfinance institutions, and fintech companies have been directed to standardise how they collect and remit VAT on eligible service fees, which is expected to streamline tax reporting and potentially broaden the revenue base. This follows broader tax reforms aimed at simplifying compliance and strengthening revenue collection, as mandated by the Nigeria Revenue Service (Establishment) Act, 2025.
Bottom Line for Nigerians
For ordinary bank customers, there is no new VAT on the money you transfer, receive, or keep in your accounts. What the NRS has clarified is that the existing VAT framework continues to apply only to the service fees charged by banks and financial institutions, a point the revenue agency hopes will reduce misinformation and reassure the public.
