The Nigeria Revenue Service (NRS) has refuted reports claiming that Value-Added Tax (VAT) has been newly applied to banking services, including money transfers, fees, and commissions.
Dare Adekanmbi, Special Adviser on Media to NRS Executive Chairman, Dr.. Zacch Adedeji, described such reports as misleading and inaccurate in a statement issued on Thursday in Abuja.
He also clarified that VAT has always been applicable to certain banking services under Nigeria’s existing tax framework.
The recently enacted Nigeria Tax Act did not introduce any new VAT charges on banking transactions, nor does it create additional obligations for customers.
“A number of misleading narratives are circulating, suggesting VAT is newly imposed on banking fees and charges.
”This is categorically false. VAT has long applied to fees, commissions, and other charges for services provided by banks and financial institutions,” Adekanmbi explained.
He further emphasised that VAT is levied only on service fees, not on the principal amounts transferred or withdrawn.
For instance, if a bank charges N10 for a transfer, VAT of 7.5% (N0.75) applies to that service fee, not the full transfer amount.
Interest earned on deposits such as savings or fixed accounts remains exempt from VAT, as it does not constitute a supply of goods or services.
Adekanmbi also highlighted exemptions under the Nigeria Tax Act, noting that basic food items, essential healthcare services, and core educational services remain VAT-free to protect consumers and manage the cost of living.
He added that what has changed is enforcement and compliance monitoring, not the law itself.
Financial institutions are being reminded to remit VAT already collected in line with the existing legislation, but no new taxes on banking services have been introduced.
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