NRS
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The Nigeria Revenue Service (NRS) has clarified that there’s no new Value-Added Tax (VAT) on banking services, dismissing claims that VAT has been newly introduced on banking transactions. According to NRS, 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.
The NRS explained that the Nigeria Tax Act didn’t introduce VAT on banking charges, nor did it impose any new tax obligation on customers. The tax authority emphasized that VAT applies only to service charges or commissions collected by banks, not the money being transferred or withdrawn.
For instance, if a bank charges ₦10 for a transfer, VAT of 7.5% (₦0.75) applies to that ₦10 charge, not the amount being transferred. Interest earned on savings accounts, fixed deposits, and similar accounts is also not subject to VAT, as it’s not considered a supply of goods or services.
The NRS urged the public to disregard misinformation and rely on official communications for accurate tax information. The tax authority also reminded financial institutions of their existing obligation to remit VAT already charged and collected from customers .
The clarification comes after some banks and fintechs informed customers of the impending implementation of VAT on certain electronic banking charges, effective January 19, 2026. The affected services include mobile money transfers, USSD transactions, and card issuance fees .
The NRS has also provided Frequently Asked Questions (FAQs) to address public concerns and prevent misunderstanding. According to the FAQs, basic food items, essential goods, medical services, pharmaceutical products, and tuition fees remain exempt from VAT.
The tax authority emphasized that the change is in compliance and enforcement, not the law itself. Financial institutions are being reminded of their existing obligations to remit VAT.
