The Nigeria Revenue Service (NRS) has clarified that Value Added Tax (VAT) is not charged on money transferred through banks, but only on the service fees banks collect for facilitating such transactions.
In a statement issued on Thursday, the NRS dismissed reports suggesting that VAT is being newly imposed on electronic transfers and other banking transactions, describing such claims as inaccurate and misleading.
The statement, signed by the Special Adviser on Media to the NRS Chairman, Zaccheus Adedeji, Dare Adekanmbi, explained that VAT has always applied to banking services under Nigeria’s tax framework 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 agency stated.
According to the NRS, assertions that VAT is now being charged on electronic money transfers, banking fees, or commissions are unfounded.
“The Nigeria Revenue Service wishes to 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 statement said.
The service noted that fees and charges imposed by banks and other financial institutions have long been subject to VAT under the existing tax regime.
“VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT system,” it added.
Clarifying further, the NRS stressed that VAT is applied strictly to the service charge and not to the actual amount of money transferred or withdrawn by customers.
“VAT is not charged on the amount of money transferred or withdrawn.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. For instance, if a bank charges ₦10 for a transfer, VAT of 7.5 per cent—₦0.75—applies to that ₦10 charge, not to the sum being transferred,” the agency explained.
The NRS also reassured customers that interest earned on savings accounts, fixed deposits, and similar investments 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 stated.
Addressing concerns about the rising cost of living, the revenue service emphasised that basic food items and other essential goods remain exempt from VAT.
“The Nigeria Tax Act expressly exempts basic food items and essential goods from VAT to protect consumers and help reduce the cost of living,” the statement said.
It added that essential medical services, pharmaceutical products, tuition, and core educational services provided by recognised institutions are also excluded from VAT.
On recent developments in the tax system, the NRS explained that current efforts are focused on enforcement and compliance rather than the introduction of new taxes.
“What has changed is compliance and enforcement, not the law. Financial institutions are simply being reminded of their existing obligation to remit VAT already charged and collected from customers,” it said.
The agency maintained that the Nigeria Tax Act does not impose additional VAT burdens on Nigerians, particularly in sensitive areas such as savings, food, healthcare, 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,” the statement concluded.
The NRS urged the public to disregard unverified reports and rely on official sources for accurate and up-to-date tax information.
