FG Clarifies: VAT on Bank Services is Not Newly Introduced

The Federal Government clarified on Thursday that value-added tax (VAT) on banking services is not a new policy, following reports suggesting the levy had recently been applied to electronic money transfers and other banking transactions.

The clarification came after complaints from customers who believed fresh charges were being imposed at a time of rising inflation and higher living costs.

In a statement, the Nigeria Revenue Service (NRS) said existing tax laws already require banks to charge and remit VAT on fees and commissions for services such as transfer fees, USSD transactions, card issuance, and account maintenance. The agency emphasized that banks act as collection agents under Nigeria’s established VAT regime and that no new tax has been introduced. “The Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard,” said Dare Adekanmbi, Special Adviser on Media to the NRS Chairman, Zacch Adedeji.

The NRS explained that the government is now focusing on strengthening enforcement and compliance. Banks, microfinance institutions, and electronic money operators are required to ensure proper collection and remittance of VAT according to the Nigeria Tax Act.

Payment platforms, including fintech company Moniepoint, had previously informed customers that from January 19, 2026, VAT at 7.5 per cent would apply to service charges on mobile money transfers, USSD transactions, and card issuance. The company clarified that VAT applies only to service fees—not to the amounts being transferred—and that the move is a statutory requirement, not a price increase.

The NRS stressed that the change relates to enforcement, not the law itself, reminding financial institutions of their obligation to remit VAT already collected. The renewed enforcement effort is part of a broader initiative to standardize VAT collection in Nigeria’s digital financial sector, enhance transparency, and boost revenue amid the country’s growing digital economy.

Moniepoint further clarified that services exempt from VAT include interest earned on deposits and savings, as well as essential goods, education, and medical services. VAT will be clearly itemized on transaction statements.

“Services that do not attract VAT include interest on loans and advances and interest on deposits and savings. This is not a price increase by Moniepoint. The company is required to collect and remit VAT to the NRS,” the fintech said. It added that all banks, microfinance institutions, and electronic money operators must begin collecting and remitting VAT by January 19, 2026.

In addition, Nigerian banks in December began applying a N50 stamp duty on electronic transfers of N10,000 and above, a charge previously known as the Electronic Money Transfer Levy, now formally reclassified as stamp duty.