Bank Fees Attract VAT, Not Transfer Amounts — Revenue Service

Nigeria Tax Act Did Not Introduce VAT on Bank Transfers — NRS

THE Nigeria Revenue Service (NRS) has issued a formal clarification following public concern over reports that Value-Added Tax (VAT) is now being imposed on bank transfers and electronic transactions.

According to the agency, such claims are false and misrepresent existing tax policy.

Old Law, New Enforcement

In a statement released through its media adviser, Dare Adekanmbi, the NRS said VAT has always applied to banking service charges and was not introduced by the Nigeria Tax Act, 2025.

“The claim that VAT was newly imposed on banking services or electronic transfers is categorically incorrect,” the statement said.

The agency explained that the Act focuses on improving tax administration, compliance, and enforcement rather than introducing new tax burdens.

What VAT Covers in Banking

The NRS clarified that VAT applies only to service charges such as transfer fees, USSD charges, ATM card issuance fees, and account maintenance costs.

Crucially, VAT does not apply to the principal amount transferred between accounts.

This means customers are taxed only on the service provided by banks, not on their savings or transaction values.

Protected Income and Essential Goods

The clarification further stated that interest on savings and fixed deposits remains VAT-exempt, reinforcing long-standing tax principles.

In addition, basic food items, medical supplies, pharmaceutical products, and recognised educational services continue to enjoy VAT exemptions, ensuring that vulnerable consumers are protected from rising costs.

Call for Accurate Information

The NRS warned that misinformation around taxation can create unnecessary anxiety and undermine public trust. It urged Nigerians to rely on official communications and FAQs released by the agency for clarity.

“What changed is enforcement, not taxation,” the agency reiterated.