- Nigerians panicked over claims of new VAT on bank transfers, but NRS clarified misconceptions
- NRS affirmed existing VAT applies only to bank service fees, not customer funds
- Tax authorities enforced existing VAT rules, dispelling fears of new financial burdens
The Nigeria Revenue Service (NRS) has moved swiftly to calm rising public anxiety following widespread claims that the federal government has imposed Value Added Tax (VAT) on bank transfers and customer funds.
In recent days, social media posts and media reports have suggested that electronic transfers, bank charges and commissions are now newly subject to VAT under the Nigeria Tax Act, 2025.
Source: Facebook
The claims triggered panic among Nigerians already grappling with rising inflation, higher utility bills and mounting economic pressures.
However, the NRS insists that no new tax has been introduced on bank transfers or deposits, describing the reports as misleading.
“VAT on banking services is not new”
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Arabinrin Aderonke Atoyebi, Technical Assistant on Broadcast Media to the Executive Chairman of the NRS, told Legit.ng that VAT on banking services has existed for decades and was not introduced by the 2025 tax law.
“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 said.
She explained that the confusion stems from a misunderstanding of how VAT applies to banking transactions, particularly the difference between customer funds and bank service charges.
What VAT actually applies to
According to Atoyebi, VAT is applied strictly to service fees charged by banks, not to the money customers transfer, withdraw or receive.
“VAT is not, and has never been, charged on the amount of money a customer transfers or withdraws. It applies only to the service fee imposed by the bank,” she said, stressing that the distinction is critical.
She illustrated that whether a customer transfers ₦10,000 or ₦1 million, the full amount reaches the recipient without any VAT deduction. The tax applies only to the transaction fee charged by the bank.
For instance, a ₦100,000 transfer may attract a ₦50 service charge. VAT at 7.5 per cent on that fee amounts to ₦3.75, in addition to the statutory stamp duty where applicable.
USSD, interest income and exemptions
The NRS further clarified that VAT on USSD banking applies only to the session fee charged by telecom operators or banks.
Interest earned on savings accounts, fixed deposits and similar instruments remains exempt, as such income does not qualify as a taxable supply under existing tax laws.
Atoyebi also reaffirmed that essential goods and services remain outside the VAT net.
Basic food items, medical and pharmaceutical products, educational services and other essentials continue to enjoy full VAT exemption under the Nigeria Tax Act, 2025.
“These exemptions were deliberately retained to protect vulnerable citizens,” she said.
Why did the panic start?
Addressing the sudden surge in concern, Atoyebi attributed it to renewed enforcement by tax authorities.
She said banks are being reminded of their obligation to remit VAT already charged and collected, creating the false impression that a new tax has been introduced.
Source: Twitter
“This is not a new tax. It is the enforcement of an existing one,” she explained.
The NRS urged Nigerians to rely on verified information rather than alarmist headlines, insisting that the 2025 tax reforms do not impose any additional VAT burden on ordinary citizens.
As discussions around taxation continue, the agency said the focus should remain on transparency, fairness and the responsible use of public revenue for national development.
Inside Nigeria’s quiet but significant tax reform
Legit.ng earlier reported that Nigeria’s tax administration entered a new and quietly consequential phase with the successful transition from the Federal Inland Revenue Service (FIRS) to the Nigeria Revenue Service (NRS).
While the change attracted little public drama, officials said it represents one of the most important structural reforms in the country’s revenue system in years.
According to Arabinrin Aderonke Atoyebi, Technical Assistant on Broadcast Media to the Executive Chairman of NRS, the transition goes far beyond a change of name.
Proofreading by Funmilayo Aremu, copy editor at Legit.ng.
Source: Legit.ng