The Nigeria Revenue Service (NRS) has dispelled misinformation doing the rounds on the imposition of Value-Added Tax (VAT) on banking services, including electronic money transfer, fees and commission, describing the reports as incorrect and misleading.
In a statement on Thursday, NRS said VAT has always applied to banking services and is not newly introduced under the new tax law, the Nigeria Tax Act.
The statement signed by Dare Adekanmbi, Special Adviser on Media to the NRS chairman, Zacch Adedeji, stated, “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 Nigeria Revenue Service (NRS) wishes to address and correct misleading narratives circulating in sections of the media suggesting that Value Added Tax (VAT) has been newly introduced on banking services, fees, commissions, or electronic money transfers. This claim is categorically incorrect.
“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 Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard.
“The Nigeria Revenue Service urges members of the public and all stakeholders to disregard misinformation and to rely exclusively on official communications for accurate, authoritative, and up-to-date tax information.”
The statement also included a list of Frequently Asked Questions (FAQs) on VAT as it relates to the tax law to provide further clarity on other areas of concern to Nigerians.
FREQUENTLY ASKED QUESTIONS ON VAT
To further address public concerns and prevent misunderstanding, the Nigeria Revenue Service (NRS) provides the following clarifications.
Q1: Is VAT charged on banking services?
Yes, where a fee or commission is charged for a service.
VAT applies to commissions, fees, and charges for services rendered by banks and other financial institutions, such as transfer fees, USSD charges, card issuance fees, account maintenance fees, and similar service charges. This has always been the position under Nigerian VAT law, and was not introduced by the Nigeria Tax Act.
Q2: Does VAT apply to the money I transfer or withdraw?
No. VAT is not charged on the amount of money transferred or withdrawn. It applies only to the service charge or commission imposed by the bank. For example, if a bank charges ₦10 for a transfer, VAT of 7.5% (₦0.75) applies to that ₦10 charge—not to the amount being transferred.
Q3: Is VAT charged on savings account interest or interest on bank deposits?
No. Interest earned on savings accounts, fixed deposits, and similar deposit accounts is not subject to VAT. Interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act, 2025 .
Q4: Are basic food items and essential goods subject to VAT?
No. The Nigeria Tax Act expressly exempts basic food items and essential goods from VAT in order to protect consumers and reduce the cost of living. These exemptions are clearly listed under the VAT exemption provisions of the Act .
Q5: Are medical and pharmaceutical products vatable?
No. Essential medical services and pharmaceutical products are VAT-exempt under the Nigeria Tax Act, consistent with longstanding policy to ensure access to healthcare.
Q6: Are educational services subject to VAT?
No. Tuition and core educational services provided by recognised educational institutions are exempt from VAT under the Act.
Q7: What exactly changed recently if VAT is not new?
What changed is compliance and enforcement, not the law. Financial institutions are being reminded of their existing obligation to remit VAT already charged and collected from customers, in line with the Nigeria Tax Act.
Q8: Did the Nigeria Tax Act introduce any new VAT burden on ordinary Nigerians?
No. The Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption. Claims suggesting otherwise are misleading and incorrect.
e-signed
Dare Adekanmbi
Special Adviser on Media to the Nigeria Revenue Service (NRS)
Executive Chairman, Zacch Adedeji, Ph.D.
