“VAT Is Only on Bank Charges, Not on Money Transferred” — NRS

The Nigeria Revenue Service (NRS) has clarified that the 7.5 percent Value Added Tax (VAT) applies only to fees charged by banks for their services, not to the actual amounts customers transfer.

The statement follows reports suggesting VAT would be levied directly on bank transfers, which the NRS described as inaccurate.

Issued on Thursday and signed by Dare Adekanmbi, Special Adviser on Media to the NRS Chairman, the agency emphasized that VAT on banking services is longstanding under Nigeria’s tax system.

“The Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligations on customers,” the statement said.

The NRS warned that claims of VAT being newly applied to electronic transfers, commissions, or fees are false.

“VAT has always applied to fees, commissions, and service charges collected by banks and other financial institutions. It does not apply to the amounts customers transfer or withdraw,” the agency explained.

For instance, if a bank charges ₦10 for a transfer, VAT of 7.5 percent—₦0.75—applies only to that fee, not the transferred amount.

Interest earned on savings accounts, fixed deposits, and similar products is also exempt from VAT. “Interest income is not considered a supply of goods or services and therefore does not attract VAT,” the statement noted.

The NRS reiterated that basic food items, essential goods, core medical services, pharmaceuticals, tuition, and educational services remain VAT-free to protect consumers.

The service stressed that recent changes focus on enforcement and compliance, not new VAT obligations, urging Nigerians to rely on official communications for accurate information.