WorldStage– The Nigeria Revenue Service (NRS) has dispelled misinformation making 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.
To further address public concerns and prevent misunderstanding, the Nigeria Revenue Service (NRS) provides the following clarifications.
The Service explained that 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.
It said this has always been the position under Nigerian VAT law, and was not introduced by the Nigeria Tax Act.
Again, NRS said VAT is not charged on the amount of money transferred or withdrawn but that it applies only to the service charge or commission imposed by the bank.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.
On wether VAT is charged on savings account interest or interest on bank deposits, it affirmed that interest earned on savings accounts, fixed deposits, and similar deposit accounts is not subject to VAT and that interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act, 2025.
NRS also addressed the issue of wether basic food items and essential goods subject to VAT, clarifying that 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,” it added.
On wether medical and pharmaceutical products vatable, it explained that essential medical services and pharmaceutical products are VAT-exempt under the Nigeria Tax Act, consistent with longstanding policy to ensure access to healthcare.
It also gave clarification on educational services being subject to VAT, saying tuition and core educational services provided by recognised educational institutions are exempt from VAT under the Act.
If VAT is not new what then exactly changed the Revenue Service said 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,” it stated.
Giving explanation on wether the Nigeria Tax Act introduce any new VAT burden on ordinary Nigerians, NRD stated that the Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption, slamming claims suggesting otherwise as misleading and incorrect.
