The Nigeria Revenue Service (NRS) has clarified that the 7.5 per cent Value Added Tax (VAT) applies only to charges imposed by banks for their services and not to the actual amounts transferred or withdrawn by customers.
The clarification follows widespread reports suggesting that VAT would be charged directly on bank transfers and other customer transactions. The NRS described such claims as misleading and incorrect.
In a statement issued on Thursday, the revenue service explained that VAT has always applied to banking service charges 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.
According to the NRS, reports claiming 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,” the service stated.
It stressed that VAT is charged only on the service provided by the bank and not on the amount of money transferred or withdrawn by customers.
“For example, if a bank charges ₦10 for a transfer, VAT of 7.5 per cent, amounting to ₦0.75, applies only to that ₦10 service charge and not to the sum being transferred,” the NRS explained.
The revenue service also clarified that interest earned on savings accounts, fixed deposits, and similar bank deposits is exempt from VAT.
“Interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act,” the statement said.
Addressing concerns about rising living costs, 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 tax framework, the service noted that the focus is on improved compliance and enforcement rather than the introduction of new VAT rules.
“What has changed is compliance and enforcement, not the law,” the NRS said. “Financial institutions are being reminded of their obligation to remit VAT already charged and collected.”
The NRS emphasised that the Nigeria Tax Act does not impose any new VAT burden on ordinary Nigerians, particularly in areas such as savings, food, healthcare, and education.
The agency urged the public to disregard misinformation and rely on official communications for accurate tax information.
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