7.5% VAT on Banking Services Is Not a New Tax
The Nigeria Revenue Service (NRS) has moved to douse public anxiety following viral reports regarding the implementation of Value Added Tax (VAT) on financial transactions. In a definitive statement released on Thursday, the agency clarified that the 7.5% VAT on banking services 2026 is not a newly introduced levy. Contrary to trending social media narratives, the NRS emphasized that these charges have been part of Nigeria’s tax framework for years and were merely reaffirmed by the recently enacted Nigeria Tax Act 2025.
What the NRS Statement Means for Bank Customers
According to the Nigeria Revenue Service VAT update, the tax is only applicable to the service fees or commissions charged by financial institutions, not the actual principal amount being sent or received. For example, if a customer performs a mobile transfer with a bank fee of ₦10, the 7.5% VAT will apply only to that ₦10, resulting in a minor charge of ₦0.75.
[Image: Infographic showing VAT calculation on a ₦10 bank transfer fee]
This clarification is intended to stop the spread of misinformation suggesting that 7.5% of a customer’s total transfer amount would be deducted. The NRS, led by Executive Chairman Zacch Adedeji, stressed that the Nigeria Tax Act 2025 impact is focused on institutionalizing compliance rather than creating a fresh financial burden for ordinary Nigerians.
Compliance Deadline: January 19, 2026
While the tax itself isn’t new, the level of enforcement is reaching a new peak. The NRS has set a strict deadline of January 19, 2026, for all commercial banks, microfinance banks, and fintech operators like Moniepoint, OPay, and Palmpay to ensure full compliance.
This NRS tax compliance January 19 directive mandates that financial institutions must clearly itemize the VAT on transaction receipts. Many fintechs have already begun notifying their customers that VAT on USSD and transfer charges will be remitted directly to the government, emphasizing that this is a regulatory requirement and not a price hike by the platforms themselves.
Exemptions Under the New Tax Regime
To protect the most vulnerable and encourage financial inclusion, the NRS identified several services that remain strictly exempt from VAT. These include:
- Interest on Savings: No VAT will be charged on interest earned from personal savings or fixed deposits.
- Essential Consumption: VAT remains 0% on basic food items, education, and medical services.
- Personal Assets: The new tax laws do not target the accumulated wealth or private assets of citizens.
By keeping these exemptions in place, the government aims to maintain a “human face” on its revenue-driven reforms, ensuring that the drive for fiscal stability does not lead to a decrease in the standard of living for the average citizen.
The Future of Tax Enforcement in Nigeria
The transition from the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service (NRS) represents a broader shift toward a technology-driven, transparent tax system. The agency’s proactive stance in addressing “misleading narratives” shows a commitment to open communication.
As the January 19 deadline approaches, the NRS encourages the public to rely solely on official government channels for tax information. This era of Nigeria Revenue Service implementation is geared toward closing revenue leakages and ensuring that every naira collected by financial institutions is properly remitted to the national federation account for development projects.
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