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NRS clarifies 7.5% VAT on banking services - DAILY TRUST
By Philip Shimnom Clement
The Nigeria Revenue Service (NRS) has clarified that the imposition of Value-Added Tax (VAT) on banking services, including electronic money transfer, fees and commission, noting it is only applicable to charges already collected by banks.
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, explained that “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 said.
The statement also included a list of Frequently Asked Questions (FAQs) on VAT as it relates to the tax law in order to provide further clarity on other areas of concern to Nigerians.
In the FAQs, it explained that VAT is charged on banking services 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.
It also explained that VAT is not charged on the amount of money transferred or withdrawn, adding, “It applies only to the service charge or commission imposed by the bank. For example, if a bank charges N10 for a transfer, VAT of 7.5% (N0.75) applies to that N10 charge—not to the amount being transferred.”
It added, “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.”
