The Nigeria Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS), has issued an official clarification stating that the 7.5% Value Added Tax (VAT) currently being applied to certain banking service fees is not a new tax but a long-standing statutory requirement that has always been in place.
The statement comes in response to growing public attention and customer complaints following recent notifications from banks and fintech platforms, including Moniepoint, about the collection of 7.5% VAT on fees for services such as electronic transfers, USSD transactions, POS charges, card issuance, and other banking-related charges, effective from January 19, 2026.
In an official release, the NRS emphasized that VAT on financial services has been applicable under the Value Added Tax Act since its inception, and the recent visibility of the charge on customer statements is simply a result of improved compliance and enforcement measures.
The clarification is expected to calm apprehensions among millions of Nigerians who rely heavily on digital banking, mobile transfers, and USSD for daily transactions, especially as the January 19, 2026, effective date for clearer itemization approaches.
Financial experts have noted that while the tax itself is statutory, the increased visibility and separate deduction could lead to higher perceived costs for low-value transactions, potentially encouraging more people to explore alternative channels or cash usage in the short term.
The NRS reiterated its commitment to transparent tax administration while calling on financial institutions to educate their customers adequately about the longstanding nature of the VAT application.
As Nigeria’s digital economy continues to expand, this development underscores the delicate balance between revenue generation, regulatory compliance, and the affordability of everyday banking services for ordinary citizens.
The statement comes in response to growing public attention and customer complaints following recent notifications from banks and fintech platforms, including Moniepoint, about the collection of 7.5% VAT on fees for services such as electronic transfers, USSD transactions, POS charges, card issuance, and other banking-related charges, effective from January 19, 2026.
In an official release, the NRS emphasized that VAT on financial services has been applicable under the Value Added Tax Act since its inception, and the recent visibility of the charge on customer statements is simply a result of improved compliance and enforcement measures.
Key points from the NRS clarification include:
- The 7.5% VAT rate remains unchanged and has not been increased.
- The tax is levied only on the service fees charged by banks and financial institutions, not on the principal amount being transferred or transacted.
- For example, if a bank charges N50 for a transfer, the additional VAT is N3.75 (7.5% of N50), bringing the total deduction to N53.75.
- This is separate from other statutory charges like the N50 stamp duty on qualifying transfers.
- The NRS described the current implementation as a “regulatory clarification and enhanced compliance drive” aimed at ensuring uniform application across all commercial banks, microfinance banks, payment service providers, and fintech operators.
The clarification is expected to calm apprehensions among millions of Nigerians who rely heavily on digital banking, mobile transfers, and USSD for daily transactions, especially as the January 19, 2026, effective date for clearer itemization approaches.
Financial experts have noted that while the tax itself is statutory, the increased visibility and separate deduction could lead to higher perceived costs for low-value transactions, potentially encouraging more people to explore alternative channels or cash usage in the short term.
The NRS reiterated its commitment to transparent tax administration while calling on financial institutions to educate their customers adequately about the longstanding nature of the VAT application.
As Nigeria’s digital economy continues to expand, this development underscores the delicate balance between revenue generation, regulatory compliance, and the affordability of everyday banking services for ordinary citizens.
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