No new VAT charges on bank services – NRS

The Nigeria Revenue Service (NRS) has dispelled news making the rounds on the imposition of Value-Added Tax (VAT) on banking services, including electronic money transfer, fees and commission.

Mr Dare Adekanmbi, Special Adviser on Media to Dr Zacch Adedeji, the Executive Chairman of NRS, said this in a statement in Abuja on Thursday, describing the reports as incorrect and misleading.

Adekanmbi said that VAT had always applied to banking services, adding that it was not newly introduced under the new tax law, the Nigeria Tax Act.

According to him, 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 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,” he said.

He urged 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 in order to provide further clarity on other areas of concern to Nigerians.

Meanwhile, in addressing some frequently asked questions, Adekanmbi said that VAT applies to commissions, fees, and charges for services rendered by banks and other financial institutions.

He listed such services to include transfer fees, USSD charges, card issuance fees, account maintenance fees, and similar service charges.

According to him, this has always been the position under Nigerian VAT law, and was not introduced by the Nigeria Tax Act.

He said that VAT was not charged on the amount of money transferred or withdrawn.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 N10 for a transfer, VAT of 7.5 per cent (N0.75) applies to that N10 charge, not to the amount being transferred,” he said.

He said that interest earned on savings accounts, fixed deposits, and similar deposit accounts was not subjected to VAT.

Adekanmbi said that interest income was not a supply of goods or services and therefore did not attract VAT under the Nigeria Tax Act, 2025 .

He also said that the Nigeria Tax Act expressly exempted 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 .

“Essential medical services and pharmaceutical products are VAT-exempt under the Nigeria Tax Act, consistent with longstanding policy to ensure access to healthcare.

“Tuition and core educational services provided by recognised educational institutions are exempt from VAT under the Act,” he said.

According to him, what has 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.

“The Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption.

“Claims suggesting otherwise are misleading and incorrect,” he said.