The Nigeria Revenue Service says 7.5% VAT applies only to bank service charges, not to money transferred by customers, debunking misinformation

The Nigeria Revenue Service (NRS) has clarified that the 7.5 per cent Value Added Tax (VAT) applies only to charges collected by banks for their services and not to the actual amount of money transferred or withdrawn by customers.

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The clarification follows widespread reports suggesting that VAT would be charged directly on bank transfers and other customer transactions, a claim the NRS described as misleading and incorrect.

In a statement issued yesterday and signed by the Special Adviser on Media to the NRS Chairman, Dare Adekanmbi, the revenue service said VAT has always applied to banking services under Nigeria’s tax system and was not introduced by the Nigeria Tax Act.

“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 NRS stressed that claims circulating in sections of the media that VAT is being newly imposed on electronic money transfers, banking fees or commissions are false.

“VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime,” it said.

The service explained that VAT is charged only on the service provided by the bank and not on the amount of money a customer transfers or withdraws.

“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 NRS stated.

The revenue service also clarified that interest earned on savings accounts, fixed deposits and similar bank deposits does not attract VAT.

“Interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act,” it said.

Addressing concerns about the rising cost of living, the NRS reaffirmed that basic food items and essential goods remain exempt from VAT.

It added that essential medical services, pharmaceutical products, tuition and core educational services provided by recognised institutions are also VAT-exempt.

On recent developments under the current tax framework, the service said the focus is on improved compliance and enforcement rather than the introduction of new VAT rules.

“What changed is compliance and enforcement, not the law,” the statement said, noting that financial institutions are being reminded of their obligation to remit VAT already charged and collected.

The NRS emphasised that the Nigeria Tax Act did not introduce any new VAT burden on ordinary Nigerians, particularly in areas such as savings, food, healthcare and education.