The Nigeria Revenue Service (NRS) has moved to clarify widespread misconceptions regarding Value-Added Tax (VAT) on banking services, stating categorically that the tax on fees, commissions, and electronic money transfer charges is not a new imposition under the Nigeria Tax Act.
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In a statement issued on Thursday by Dare Adekanmbi, Special Adviser on Media to NRS Chairman Zacch Adedeji, the revenue agency described recent media reports suggesting VAT was newly introduced on banking services as “categorically incorrect” and “misleading.”
“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 statement clarified. “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 NRS emphasized that what has changed is not the law itself, but rather the compliance and enforcement mechanisms. Financial institutions are being reminded of their existing obligation to remit VAT already charged and collected from customers.
In a detailed Frequently Asked Questions (FAQ) document accompanying the statement, the NRS explained that VAT applies only to service charges imposed by banks such as transfer fees, USSD charges, card issuance fees, and account maintenance fees not to the actual amounts being transferred or withdrawn.
For example, if a bank charges ₦10 for a transfer, VAT of 7.5% (₦0.75) applies to that ₦10 service charge, not to the principal amount being transferred.
The revenue service also used the opportunity to reiterate that several essential items and services remain exempt from VAT under the Nigeria Tax Act:
Interest Income: Interest earned on savings accounts, fixed deposits, and similar deposit accounts is not subject to VAT, as interest income does not constitute a supply of goods or services.
Basic Food Items: Essential food items remain VAT-exempt to protect consumers and reduce the cost of living.
Medical and Pharmaceutical Products: Essential medical services and pharmaceutical products continue to enjoy VAT exemption to ensure access to healthcare.
Educational Services: Tuition and core educational services provided by recognized educational institutions are exempt from VAT.
The NRS urged members of the public and all stakeholders to disregard misinformation circulating in various media channels and rely exclusively on official communications for accurate and authoritative tax information.
“The Nigeria Revenue Service wishes to address and correct misleading narratives circulating in sections of the media,” the statement emphasized, adding that the agency remains committed to transparency in tax administration.
Responding to concerns about increased tax burden, the NRS stated clearly: “The Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption. Claims suggesting otherwise are misleading and incorrect.”
The clarification comes amid heightened public scrutiny of taxation policies and widespread discussion on social media about alleged new taxes on banking transactions. The NRS’s intervention seeks to separate fact from fiction and reassure Nigerians that the fundamental VAT framework remains unchanged.
Financial institutions are expected to continue their existing practice of collecting and remitting VAT on service charges as they have done under previous tax legislation.
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