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By Lizzy Chirkpi
The Nigeria Revenue Service (NRS) has dismissed reports suggesting that a new Value-Added Tax (VAT) has been imposed on banking transactions, describing such claims as false and misleading.
In a statement issued on Thursday, the NRS clarified that VAT has always applied to service charges, fees, and commissions earned by banks and other financial institutions, stressing that no new tax was introduced under the Nigeria Tax Act.
The statement, signed by Dare Adekanmbi, Special Adviser on Media to NRS Chairman, Zacch Adedeji, stated that recent media reports had wrongly given the impression that customers were being subjected to fresh VAT obligations on banking transactions.
“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.
According to the agency, VAT applies strictly to charges for services rendered by banks such as transfer fees, account maintenance charges, USSD fees, card issuance fees, and similar commissions and not to the actual funds being transferred or withdrawn.
“The Nigeria Revenue Service (NRS) wishes to address and correct misleading narratives circulating in sections of the media suggesting that Value Added Tax (VAT) has been newly introduced on banking services, fees, commissions, or electronic money transfers. This claim is categorically incorrect,” the statement added.
To illustrate, the NRS explained that where a bank charges ₦10 as a transfer fee, VAT at 7.5 per cent is applied only to that ₦10 service charge, amounting to ₦0.75, and not to the total sum being transferred.
The agency also clarified that interest earned on savings accounts, fixed deposits, and similar bank deposits remains exempt from VAT, as interest income does not qualify as the supply of goods or services under Nigerian tax law.
Reassuring Nigerians further, the NRS noted that essential items and services including basic food items, medical and pharmaceutical products, and educational services continue to enjoy VAT exemptions as provided for under the Nigeria Tax Act.
“The Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption. Claims suggesting otherwise are misleading and incorrect,” Adekanmbi said.
Addressing the heightened public concern surrounding the issue, the agency emphasised that the recent development relates to enforcement and compliance, not a change in the law.
“What has changed is compliance and enforcement, not the law itself. Financial institutions are being reminded of their existing obligation to remit VAT already charged and collected from customers, in line with the Nigeria Tax Act,” the statement explained.
The NRS urged the public to rely on official communications for accurate information on tax matters and to disregard unverified reports capable of causing unnecessary panic. To enhance public understanding, the agency also released a detailed Frequently Asked Questions (FAQs) document outlining how VAT applies to banking services and other sectors of the economy.
By reaffirming existing VAT exemptions and clarifying the scope of taxable banking services, the NRS said it remains committed to transparency, consumer protection, and accurate public communication on tax policy.