The Nigeria Revenue Service (NRS) has clarified that Value Added Tax (VAT) applies only to bank service charges and not to customers’ funds, dismissing reports suggesting the introduction of a new VAT regime on banking transactions as false and misleading.
In a statement issued on Thursday, the NRS said VAT has always applied to fees, commissions and charges for services rendered by banks and other financial institutions, stressing that the Nigeria Tax Act did not introduce any new VAT on banking services.
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The statement, signed by the Special Adviser on Media to the NRS Chairman, Dare Adekanmbi, quoted the Executive Chairman, Zacch Adedeji, as saying that claims circulating in some sections of the media were incorrect.
“The Nigeria Revenue Service wishes to address and correct misleading narratives suggesting that VAT has been newly introduced on banking services, fees, commissions or electronic money transfers. This claim is categorically incorrect,” the statement said.
According to the NRS, VAT applies only where a bank charges a fee or commission for a service, such as transfer fees, USSD charges, card issuance fees and account maintenance fees. It does not apply to the actual amount of money transferred or withdrawn by customers.
“For example, if a bank charges N10 for a transfer, VAT of 7.5 per cent applies to that N10 charge, not to the amount being transferred,” the agency explained.
The revenue service also clarified that interest earned on savings accounts, fixed deposits and similar bank deposits is not subject to VAT, as interest income does not constitute a supply of goods or services under the Nigeria Tax Act, 2025.
Addressing broader public concerns, the NRS reiterated that basic food items, essential goods, medical and pharmaceutical products, as well as educational services, remain VAT-exempt under the law.
The agency noted that what has changed recently is not the law itself, but compliance and enforcement, as financial institutions are being reminded of their long-standing obligation to remit VAT already charged and collected from customers.
The NRS urged Nigerians to disregard misinformation and rely solely on official communications for accurate and up-to-date tax information, adding that the Nigeria Tax Act did not introduce any new VAT burden on ordinary citizens.