The Nigeria Revenue Service (NRS) has dismissed reports suggesting that Value Added Tax (VAT) is being charged directly on bank transfers, clarifying that the 7.5 per cent tax applies only to service charges imposed by banks and not to the actual funds transferred by customers.
In a statement issued on Thursday, the revenue agency described recent media reports claiming that VAT is being newly imposed on electronic transfers and other banking transactions as inaccurate and misleading. The statement was signed by Dare Adekanmbi, Special Adviser on Media to the NRS Chairman, Zaccheus Adedeji.
According to the NRS, VAT has always applied to banking services under Nigeria’s existing tax framework and was not introduced by the Nigeria Tax Act. The agency stressed that no new tax burden had been placed on customers regarding electronic transfers.
“The Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard,” the statement said.
The service explained that claims suggesting VAT is now being charged on electronic money transfers, banking fees, or commissions are unfounded. It noted that fees, commissions and charges for services rendered by banks and other financial institutions have long been subject to VAT under Nigeria’s VAT regime.
The NRS further clarified that VAT is applied strictly to the service charge and not to the principal amount transferred or withdrawn by customers.
“VAT is not charged on the amount of money transferred or withdrawn. It applies only to the service charge or commission imposed by the bank,” the agency stated. “For example, if a bank charges ₦10 for a transfer, VAT of 7.5 per cent, which is ₦0.75, applies to that ₦10 charge, not to the amount being transferred.”
The revenue service also reassured the public that interest earned on savings accounts, fixed deposits and similar investments does not attract VAT, as such income does not constitute a supply of goods or services under the Nigeria Tax Act.
“Interest income is not a supply of goods or services and therefore does not attract VAT,” it added.
Addressing broader concerns about the rising cost of living, the NRS emphasised that basic food items and other essential goods remain exempt from VAT. It said the Nigeria Tax Act expressly excludes basic food items from VAT to protect consumers and ease economic pressure on households.
The agency also noted that essential medical services, pharmaceutical products, tuition and core educational services offered by recognised institutions are VAT-exempt.
On recent developments in the tax system, the NRS explained that the focus is on compliance and enforcement rather than on introducing new taxes. It said financial institutions are merely being reminded of their existing obligation to remit VAT on service fees that have already been charged and collected.
“What has changed is compliance and enforcement, not the law,” the statement said, adding that the Act does not impose additional VAT burdens on savings, food, healthcare or education.
The NRS urged members of the public to disregard unverified reports and rely on official communications for accurate and up-to-date information on tax matters.
