Nigeria’s tax authority, the Nigeria Revenue Service (NRS), has moved swiftly to calm widespread alarm among the public over reports that new Value Added Tax (VAT) charges will be imposed on everyday banking transactions. The NRS issued a formal statement clarifying that there has been no fresh imposition of VAT on banking fees and that longstanding tax rules, rather than new legislation, apply to such charges.
The clarification came in response to a wave of social media messages and messages from some financial institutions suggesting that, from mid-January 2026, customers would incur a 7.5 per cent VAT on certain banking services, including electronic money transfers and USSD charges. These notices sparked anxiety among many Nigerians, with some fearing that the new tax regime embodied in the Nigeria Tax Act had broadened the tax base to include everyday financial transactions.
In a press release, the NRS made it unequivocally clear that VAT on banking service charges is not a new development. According to the agency, the tax has always applied to fees, commissions and service charges levied by banks and other financial institutions under the country’s enduring VAT framework. What some reports labelled as new was, in fact, increased enforcement and compliance with existing laws, rather than any change in the legal obligations of customers.
The statement, signed by Dare Adekanmbi, Special Adviser on Media to the NRS Chairman, Dr Zacch Adedeji, stressed that the Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax burden on customers in this regard. Instead, the Act reaffirmed the position of existing tax law. The NRS urged members of the public and all stakeholders to disregard misinformation circulating in parts of the media and to rely exclusively on official channels for accurate tax information.
To further demystify the issue, the NRS included a Frequently Asked Questions section alongside its statement, explaining how VAT applies in the context of banking. The agency clarified that VAT is charged only on the service fee collected by a bank, not on the principal amount being transferred or withdrawn. For instance, if a bank charges a fee for a transfer, VAT at the prevailing rate applies to that fee and not to the entire sum moved.
The revenue service also made it clear that certain financial returns, such as interest earned on savings accounts or fixed deposits, are not subject to VAT because they do not constitute the sale of goods or services. This clarification was intended to reassure savers that their interest income remains unaffected by VAT rules.
In urging calm, the NRS reaffirmed its commitment to transparency and accurate implementation of tax laws to support national economic stability. It reminded Nigerians that essential items like basic foodstuffs, healthcare products and core educational services remain exempt from VAT under the current tax regime, and that any changes in the future would be communicated clearly through official government channels.
