The Nigeria Revenue Service (NRS) has clarified which transactions and services attract Value Added Tax (VAT) under Nigeria’s new tax law, dismissing claims that fresh VAT burdens have been imposed on Nigerians.
In a statement issued on Thursday by the Special Adviser on Media to the NRS Chairman, Dare Adekanmbi, the service said the Nigeria Tax Act did not introduce VAT on banking services but only reinforced existing provisions under the long-standing VAT regime.
According to the NRS, VAT applies strictly to fees, commissions, and charges for services rendered by banks and other financial institutions, including electronic transfer fees, USSD charges, card issuance fees, and account maintenance charges.
The service stressed that VAT is not charged on the actual amount of money transferred or withdrawn, but only on the service fee imposed by the bank.
“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.
“VAT is not charged on the amount of money transferred or withdrawn.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,” the NRS said.
It also clarified that interest earned on savings accounts, fixed deposits, and similar bank deposits is not subject to VAT, noting that interest income does not qualify as a taxable supply of goods or services.
The revenue service further assured Nigerians that basic food items, essential goods, medical and pharmaceutical products, as well as educational services, remain exempt from VAT under the Nigeria Tax Act.
The NRS urged the public to ignore misleading reports circulating in the media and on social platforms, advising Nigerians to rely only on official communications for accurate tax information.
President Bola Tinubu, in June 2025, signed four tax reform bills into law, including the Nigeria Tax Act and the Nigeria Revenue Service (Establishment) Act. While some provisions took effect from June 26, 2025, others became operational from January 1, 2026.
