The Nigeria Revenue Service has dismissed widespread reports claiming that Value Added Tax is being imposed directly on bank transfers, clarifying that the 7.5 per cent levy applies exclusively to service fees charged by financial institutions and not to the actual funds being moved by customers.
In a statement issued on Thursday, the federal tax authority described recent media coverage suggesting that VAT had been newly introduced on electronic transfers and other banking transactions as both inaccurate and misleading, emphasising that the tax framework governing banking services predates the Nigeria Tax Act and remains unchanged.
The statement, signed by Dare Adekanmbi, Special Adviser on Media to NRS Chairman Zaccheus Adedeji, sought to correct what the agency characterised as “misleading narratives circulating in sections of the media” regarding the application of VAT to banking operations.
“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. “Assertions that VAT is now being charged on electronic money transfers, banking fees, or commissions are unfounded.”
The revenue service stressed that service charges levied by banks and other financial institutions have been subject to VAT under Nigeria’s existing tax regime for years, long before the passage of the Nigeria Tax Act.
“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 NRS stated. “The Nigeria Revenue Service wishes to address and correct misleading narratives circulating in sections of the media suggesting that Value Added Tax has been newly introduced on banking services, fees, commissions, or electronic money transfers. This claim is categorically incorrect.”
The agency provided a detailed explanation of how VAT is calculated on banking transactions, making clear that the tax is confined strictly to the service charge itself and does not extend to the principal amount being transferred or withdrawn by account holders.
“VAT is not charged on the amount of money transferred or withdrawn.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 service explained. “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.”
This clarification comes amid growing public concern over the cost of banking services and the broader impact of taxation on household finances in Nigeria, where inflation has remained persistently high and purchasing power has been eroded by currency devaluation and rising prices across multiple sectors.
The NRS also sought to reassure savers that interest income generated from savings accounts, fixed deposits, and similar investment products remains exempt from VAT under current tax law.
“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 wider anxieties about the rising cost of living, the revenue service pointed to provisions within the Nigeria Tax Act that explicitly exempt basic food items and other essential goods from VAT as part of efforts to protect consumers and reduce financial pressure on ordinary Nigerians.
“The Nigeria Tax Act expressly exempts basic food items and essential goods from VAT to protect consumers and reduce the cost of living,” the agency said, adding that essential medical services, pharmaceutical products, tuition fees, and core educational services provided by recognised institutions are similarly excluded from the tax.
The NRS emphasised that recent developments in the tax system relate primarily to enforcement and compliance rather than the introduction of new obligations. According to the agency, financial institutions are being reminded of their existing duty to remit VAT that has already been charged and collected from customers, rather than facing fresh tax burdens.
“What changed is compliance and enforcement, not the law. Financial institutions are being reminded of their existing obligation to remit VAT already charged and collected from customers,” the statement said.
The revenue service maintained that the Nigeria Tax Act does not impose additional VAT burdens on Nigerians, particularly in areas deemed sensitive such as savings, food security, healthcare access, and education.
“The Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption. Claims suggesting otherwise are misleading and incorrect,” it stated.
The controversy over VAT on banking services reflects broader tensions surrounding tax policy in Nigeria, where successive governments have sought to expand the tax base and improve revenue collection amid declining oil revenues and mounting debt service obligations. The Nigeria Tax Act, which came into effect in recent years, represents one of the most significant overhauls of the country’s tax framework in decades.
However, implementation of tax reforms has frequently sparked public backlash, with citizens and civil society organisations expressing concern that increased tax collection efforts disproportionately affect ordinary Nigerians already struggling with economic hardship, while enforcement against wealthy individuals and large corporations remains weak.
The NRS concluded its statement by urging members of the public to disregard unverified information circulating in the media and to rely exclusively on official channels for accurate and authoritative guidance on tax matters.
“The Nigeria Revenue Service urges members of the public and all stakeholders to disregard misinformation and to rely exclusively on official communications for accurate, authoritative, and up-to-date tax information,” the agency said.
