Zaccheus Adedeji, chairman of the Nigeria Revenue Service (NRS), has moved to allay public concerns by clarifying that Value Added Tax (VAT) is not imposed on bank transfers but only on charges levied by banks for their services.
Recall that Naijaonpoint reported that banks had announced plans to begin deducting the 7.5 percent VAT on banking services, including point-of-sale (POS) transaction fees and mobile banking transfer charges, from January 19.
However, in a statement issued on Thursday, the revenue service said that reports suggesting a new VAT burden on electronic transfers and routine banking transactions were “inaccurate and misleading.”
Dare Adekanmbi, special adviser on media to Adedeji, said VAT on banking services has existed for years 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 statement said.
“The Nigeria Revenue Service wishes to address and 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.
“VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime.”
The NRS clarified that the tax applies strictly to the service charge and not to the funds being transferred or withdrawn by customers.
“VAT is not charged on the amount of money transferred or withdrawn.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,” it said.
“For example, if a bank charges ₦10 for a transfer, VAT of 7.5 per cent, which is ₦0.75, applies to that ₦10 charge, not to the amount being transferred.
“Interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act.”
Addressing concerns linked to the rising cost of living, the service said essential items remain exempt from the tax.
“The Nigeria Tax Act expressly exempts basic food items and essential goods from VAT to protect consumers and reduce the cost of living,” the statement said.
It added that essential medical services, pharmaceutical products, tuition, and core educational services offered by recognised institutions are also excluded from VAT.
On recent changes within the tax system, the NRS said the focus is on enforcement rather than the introduction of new tax obligations.
“What changed is compliance and enforcement, not the law. Financial institutions are being reminded of their existing obligation to remit VAT already charged and collected from 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 NRS also urged Nigerians to ignore unverified reports and rely on official channels for accurate tax information.