The Nigeria Revenue Service (NRS) has officially addressed recent public concerns and media reports regarding the purported introduction of Value Added Tax (VAT) on banking services under the Nigeria Tax Act, 2025. The Service maintains that no new taxes have been imposed on customer funds or electronic transfers.
Responding to widespread social media speculation that has fueled public anxiety, Arabinrin Aderonke Atoyebi, Technical Assistant on Broadcast Media to the Executive Chairman of the NRS, clarified that VAT on banking service charges is a long-standing policy, not a new development.
“VAT on banking services is not new. It was not introduced by the Nigeria Tax Act, 2025, and it does not represent an additional financial burden on bank customers,” Atoyebi stated. She noted that the current confusion arises from a misunderstanding of how the tax is applied.
Key Clarifications for Bank Customers
To provide transparency and ease public concern, the NRS highlighted the following distinctions:
Principal Funds are Exempt: VAT is never charged on the actual amount of money being transferred or withdrawn. If a customer transfers ₦100,000, the full ₦100,000 reaches the recipient.
Service Fees Only: VAT applies strictly to the transaction fee charged by the bank. For example, on a ₦50 service charge, the 7.5% VAT amounts to only ₦3.75.
USSD & Interest: VAT on USSD banking applies only to the session fee. Crucially, interest earned on savings and fixed deposits remains exempt from VAT.
Essential Exemptions: Under the Nigeria Tax Act 2025, basic food items, medical products, and educational services remain exempt to protect the most vulnerable citizens.
“The task before us is not to fear taxation, but to demand that taxes already in place are administered fairly, communicated clearly, and used responsibly for national development.” Arabinrin Aderonke Atoyebi, NRS Technical Assistant.
The NRS attributed the recent surge in public interest to intensified enforcement efforts. The Service is currently ensuring that financial institutions remit the VAT they have already been collecting. This renewed administrative focus has been misinterpreted by some as the introduction of a new levy.
The NRS urges the public to disregard “alarmist headlines” and rely on verified information. The 2025 tax reforms are designed to simplify the tax system and ensure fairness, rather than increase the financial burden on ordinary Nigerians.
