The Nigeria Revenue Service (NRS) has clarified that Value Added Tax (VAT) is not being charged on the amounts customers transfer or withdraw from banks, stressing that the 7.5 per cent tax applies only to fees charged by banks for their services.
In a statement issued on Thursday, the NRS addressed recent media reports suggesting that VAT was newly imposed on electronic transfers and other banking transactions, describing such claims as inaccurate and misleading.
Dare Adekanmbi, Special Adviser on Media to NRS Chairman Zaccheus Adedeji, said VAT has long applied to banking service fees under Nigeria’s existing tax framework, and the Nigeria Tax Act did not introduce any new tax obligations for customers.
“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.
The NRS explained that VAT applies strictly to service charges, commissions, or fees levied by banks, not to the actual funds transferred by customers.
“For example, if a bank charges ₦10 for a transfer, VAT of 7.5 per cent (₦0.75) applies only to that service fee, not to the amount being transferred,” the statement clarified.
The agency also reassured the public that interest earned on savings, fixed deposits, and similar investments is VAT-exempt, as such income does not constitute a supply of goods or services.
“Interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act,” the NRS added.
In addition, the statement highlighted that basic food items, essential goods, medical services, pharmaceuticals, tuition, and core educational services remain exempt from VAT, reinforcing the government’s commitment to shielding consumers from unnecessary tax burdens.
The NRS emphasized that recent developments reflect enhanced enforcement and compliance, not the creation of new taxes. Banks and financial institutions are being reminded of their existing obligation to collect and remit VAT already charged to customers.
“The Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption. Claims suggesting otherwise are misleading and incorrect,” the agency stated.
The NRS concluded by urging the public to rely on official communications for accurate tax information and to disregard unverified media reports.
“The Nigeria Revenue Service urges members of the public and all stakeholders to rely exclusively on official communications for accurate, authoritative, and up-to-date tax information,” the statement added.
