The Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS), has clarified the upcoming implementation of 7.5% Value Added Tax (VAT) on mobile transfers and other electronic banking services, effective from Monday, January 19, 2026.
This follows directives issued to commercial banks, microfinance banks, and fintech operators to collect and remit the tax on specific service charges.
According to the NRS, the policy to implement the 7.5% VAT on mobile transfers is part of efforts to standardize VAT collection in Nigeria’s expanding digital economy.
The agency added that the policy applies strictly to fees charged by financial institutions for services like mobile banking transfers, USSD transactions, POS fees, card issuance, and related electronic charges.
NRS stated that the 7.5% VAT on mobile transfers and similar services is not deducted from the principal amount being sent.
In a statement issued on Thursday by the Special Adviser on Media to the NRS Chairman, Dare Adekanmbi, the agency also clarified that the Nigeria Tax Act did not introduce VAT on banking services but only reinforced existing provisions under the long-standing VAT regime.
“Yes, where a fee or commission is charged for a service. VAT applies to commissions, fees, and charges for services rendered by banks and other financial institutions, such as transfer fees, USSD charges, card issuance fees, account maintenance fees, and similar service charges. This has always been the position under Nigerian VAT law, and was not introduced by the Nigeria Tax Act.
“VAT is not charged on the amount of money transferred or withdrawn.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. For example, if a bank charges ₦10 for a transfer, VAT of 7.5% (₦0.75) applies to that ₦10 charge, not to the amount being transferred,” the NRS said.
It also clarified that interest earned on savings accounts, fixed deposits, and similar bank deposits is not subject to VAT, noting that interest income does not qualify as a taxable supply of goods or services.
The revenue service further assured Nigerians that basic food items, essential goods, medical and pharmaceutical products, as well as educational services, remain exempt from VAT under the Nigeria Tax Act.
The NRS urged the public to ignore misleading reports circulating in the media and on social platforms, advising Nigerians to rely only on official communications for accurate tax information.
This clarification comes after financial institutions sent out memos to their customers informing them of the decision to begin implementation of the 7.5% VAT on mobile transfers.
This escalated concerns from Nigerians, with many saying that the implementation of the new policy will place more burden on Nigerians.
Recall that President Bola Tinubu, in June 2025, signed four tax reform bills into law, including the Nigeria Tax Act and the Nigeria Revenue Service (Establishment) Act. While some provisions took effect from June 26, 2025, others became operational from January 1, 2026.
