Many Nigerians have been thrown into confusion following reports that banks will begin deducting a 7.5 percent Value Added Tax (VAT) on mobile transfers and POS transactions, sparking fears that customers would lose a percentage of the money they send or receive.
However, clarifications from the Nigeria Revenue Service (NRS), in a press statement shared on their official X handle, indicate that this interpretation is incorrect.
The 7.5 percent VAT is not applied to the amount being transferred, but only to the bank’s service charge on the transaction. In practical terms, if a bank charges a ₦50 transfer fee, the VAT applied is just ₦3.75, not 7.5 percent of the total amount sent.
For example, when a customer transfers ₦50,000, the ₦50,000 remains untouched. The customer typically pays the bank’s transfer fee (around ₦50), a 7.5 percent VAT on that fee, and the existing ₦50 stamp duty on transfers of ₦10,000 and above. Altogether, the total deduction is usually just over ₦100.
The NRS has also stressed that VAT on banking service fees is not a new tax introduced by recent tax laws. According to the agency, VAT has always applied to fees and commissions charged by banks under Nigeria’s long-standing VAT framework. What has changed is stricter enforcement and clearer remittance requirements for financial institutions.
Despite these clarifications, confusion spread after several banks and fintech companies issued customer notifications that appeared to suggest a new charge on electronic transfers, leading many Nigerians to assume their full transaction amounts would be taxed.
Tax analysts say the problem lies more with poor communication than new policy, urging regulators and banks to provide simple examples to help customers understand how the charges work.
For now, customers are advised to note that their money is not being taxed, only the small service fees charged by banks, and even then, the VAT amounts to just a few naira per transaction.