NRS Addresses Concerns Over VAT After Nigerians Express Worries About Banking Fees

The Nigeria Revenue Service (NRS) has responded to assertions that the Federal Government has levied a Value Added Tax (VAT) on banking services, stating firmly that no additional tax has been imposed on bank transfers or customer deposits.

Recently, various social media posts and reports in the media have indicated that electronic transfers, along with bank fees and commissions, are now subject to VAT as stipulated by the Nigeria Tax Act, 2025.

Such claims have caused widespread apprehension among Nigerians who are already grappling with increasing living costs and overall economic strain.

Arabinrin Aderonke Atoyebi, the Technical Assistant on Broadcast Media to the Executive Chairman of the NRS, characterized these assertions as misleading and clarified that VAT on banking service fees has been in existence for decades.

Atoyebi noted, "VAT on banking services is not a new development. It was not introduced by the Nigeria Tax Act, 2025, and it does not add an extra financial burden on bank customers."

She pointed out that the confusion arises from a misunderstanding between service fees charged by banks and the actual money transferred by customers.

Atoyebi highlighted that VAT is only applied to the charges for services rendered by banks and does not extend to the principal amounts being transferred or withdrawn.

According to her explanation, "VAT has never been and is not assessed on the funds that a customer transfers or withdraws. Instead, it is levied exclusively on the service fee charged by the bank," emphasizing that this distinction is essential.

For instance, she provided an example: when someone initiates a transfer, whether it be ₦10,000 or ₦1 million, the entirety of the amount is received by the beneficiary without any VAT being deducted. VAT, instead, is applicable solely to the fee charged for the transaction by the bank.

To illustrate further, a ₦100,000 transfer might incur a service fee of ₦50, which would then have a VAT of 7.5% — totalling ₦3.75, plus any mandatory stamp duty.

Atoyebi also clarified that for USSD banking, VAT is only assessed on the session fee, while interest accrued on savings accounts and fixed deposits is not subject to VAT, since such earnings do not classify as taxable supplies under the current tax regulations.

The NRS reassured the public that basic goods and services are exempt from VAT. Atoyebi stated, "Essential items such as food, medical supplies, and educational services remain clearly excluded under the Nigeria Tax Act, 2025, as a protective measure for vulnerable populations."

She attributed the recent uptick in public concern to intensified enforcement measures by tax authorities.

According to her, banks are being reminded of their responsibilities to remit VAT that has already been charged and collected, creating the impression that a new tax has been implemented.

"This renewed emphasis has generated a misconception of a novel tax, while it is, in fact, the enforcement of an already existing one," she asserted.

The NRS reiterated that the reforms enacted in 2025 do not impose any additional VAT on average Nigerians and advised the public to trust verified information rather than sensational headlines.

As discussions regarding taxation proceed, Atoyebi stressed the importance of promoting transparency, fairness, and the responsible delivery of tax revenues.

"Our challenge is not to shy away from taxes, but to advocate for the fair administration of existing taxes, their clear communication, and their responsible use to foster national development," she concluded.