The Nigeria Revenue Service (NRS) has rejected claims that the recently enacted Nigeria Tax Act has introduced a new Value Added Tax (VAT) on banking services and electronic money transfers, describing such narratives in sections of the media as inaccurate and misleading.
In an official statement issued on Thursday and widely circulated to newsmen, the NRS clarified that VAT has always applied to fees, commissions and charges levied by banks and other financial institutions under Nigeria’s long-established VAT regime. The agency emphasised that the new tax legislation did not impose any fresh VAT obligations on bank customers, nor did it expand the scope of VAT to cover actual transfer amounts or other aspects of banking services.
According to the statement by Dare Adekanmbi, Special Adviser on Media to NRS Chairman Zacch Adedeji, the confusion stemmed from recent media reports and customer notices from some banks and fintech platforms about the collection and remittance of VAT on certain electronic transactions.
“The Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard,” the statement said, urging the public and stakeholders to rely on official communications for accurate, authoritative tax guidance.
What the VAT Actually Applies To
The NRS clarified that VAT continues to apply only to the service fees charged by banks and fintechs — such as transfer fees, USSD charges, card issuance fees, and account maintenance charges — and not to the principal amount of money being transferred or withdrawn.
For example:
• If a bank charges ₦100 for a transfer, VAT of 7.5% applies only to the ₦100 service fee (i.e. ₦7.50), not to the amount sent between accounts.
The Service further explained that interest earned on savings, fixed deposits and similar accounts remains exempt from VAT, as such income is not considered a supply of goods or services under tax law. Other exemptions, such as basic food items, essential medical services and education, remain intact under the Nigeria Tax Act’s existing VAT framework.
Experts and officials, including tax policy commentators, have noted that what is now unfolding reflects enhanced enforcement and compliance across financial institutions, rather than the introduction of a new tax. Some banks and tech-based payment providers have already notified customers of the upcoming requirement to collect a 7.5% VAT on eligible electronic banking service charges effective January 19, 2026, in line with government directives to standardise collection.
Amid the debates, Taiwo Oyedele – a tax expert and Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms – reiterated on X (formerly Twitter) that “there is NO VAT on the money you transfer. VAT is only charged on the banking fee or commission which has been the case since VAT was introduced in 1993.” His clarification aimed to counter social media claims suggesting a new levy on customer transactions.
While the NRS refutes fresh tax creation, some industry stakeholders, including the Agents Association of Nigeria, have raised concerns about the impact of VAT on electronic transfers, arguing it could lead to perceived “double taxation” on customers.
The Revenue Service continues to encourage the public to disregard unverified media reports and consult official releases for up-to-date information on tax matters.
