NRS moves to quell VAT panic as Nigerians raise alarm over banking charges

The Nigeria Revenue Service (NRS) has reacted to claims that the Federal Government has introduced Value Added Tax (VAT) on banking services, insisting that no new tax has been imposed on bank transfers or customer funds.

In recent days, social media and several media reports have suggested that electronic transfers, bank charges and commissions are now subject to VAT under the Nigeria Tax Act, 2025.

The reports have fuelled anxiety among Nigerians already contending with rising living costs and broader economic pressures.

However, Arabinrin Aderonke Atoyebi, Technical Assistant on Broadcast Media to the Executive Chairman of the NRS, has described the claims as misleading, stressing that VAT on banking service charges has existed for decades.

“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 in a statement.

According to her, the confusion stems from a failure to distinguish between service charges imposed by banks and the actual funds transferred by customers.

She emphasised that VAT is applied only to fees charged by banks for providing services, not to the principal amount being transferred or withdrawn.

“VAT is not, and has never been, charged on the amount of money a customer transfers or withdraws. Rather, it applies strictly to the service fee imposed by the bank,” she explained, adding that “this distinction is critical.”

Atoyebi illustrated that when a customer makes a transfer, whether ₦10,000 or ₦1 million, the full amount reaches the recipient without any VAT deduction. Instead, VAT is charged only on the bank’s transaction fee.

For example, a ₦100,000 transfer may attract a ₦50 service charge, on which 7.5 per cent VAT amounts to ₦3.75, alongside the statutory stamp duty.

She further clarified that VAT on USSD banking applies only to the session fee, while interest earned on savings accounts and fixed deposits remains exempt, as such earnings do not qualify as taxable supplies under existing tax laws.

The NRS also reaffirmed that essential items and services remain outside the VAT net. “Basic food items, essential goods, medical and pharmaceutical products, as well as educational services, remain firmly exempt under the Nigeria Tax Act, 2025,” Atoyebi said, noting that these exemptions were deliberately retained to protect vulnerable citizens.

Addressing the sudden surge in public concern, she attributed it to renewed enforcement efforts by tax authorities.

According to her, financial institutions are being reminded of their obligation to remit VAT already charged and collected, a move that has created the impression of a newly introduced tax.

“This renewed focus has created the false impression of a new tax, when in reality, it is the implementation of an existing one,” she said.

The NRS reiterated that the 2025 tax reforms do not impose any additional VAT burden on ordinary Nigerians and urged the public to rely on verified information rather than “alarmist headlines”.

As debates over taxation continue, Atoyebi maintained that the focus should be on transparency, fairness and responsible use of tax revenues.

“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,” she said.

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