THE Nigeria Revenue Service (NRS) has addressed public concerns over value added tax (VAT) on banking transactions, stressing that the 7.5 percent VAT applies only to service charges imposed by banks and not to the actual funds transferred by customers.
In a statement released on Thursday, the agency dismissed claims circulating in the media that VAT is being deducted directly from electronic transfers or newly imposed on banking transactions, describing such reports as inaccurate.
Signed by Mr Dare Adekanmbi, Special Adviser on Media to the NRS Chairman, Mr Zaccheus Adedeji, the statement explained that VAT had always applied to banking services under Nigeria’s tax system 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 revenue service noted that suggestions that VAT was now charged on electronic money transfers, banking fees, or commissions were unfounded.
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“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,” it said.
According to the NRS, charges levied by banks and other financial institutions for services rendered had long been subject to VAT under the existing tax regime.
It noted that VAT had always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime.
The agency further clarified that VAT is calculated strictly on the service charge, not on the amount transferred or withdrawn by customers.
“VAT is not charged on the amount of money transferred or withdrawn.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,” the service 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.”
The NRS also reassured Nigerians that interest earned on savings accounts, fixed deposits, and similar investments remained exempt from VAT.
“Interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act,” it said.
Addressing broader cost-of-living concerns, the agency emphasised that basic food items and other essential goods were expressly exempt from VAT.
“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 provided by recognised institutions were also excluded from VAT.
On recent developments within the tax system, the NRS explained that the focus was on improved compliance and enforcement rather than the introduction of new taxes.
“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,” it stated.
The NRC maintained that the Nigeria Tax Act did not place additional VAT burdens on Nigerians, particularly in sensitive areas such as savings, food, healthcare, and education.
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“The Act did not introduce VAT on savings, basic food, medical care, education, or essential consumption. Claims suggesting otherwise are misleading and incorrect,” it said.
The NRS urged the public to ignore unverified reports and rely on official channels for accurate information on tax matters.
“The Nigeria Revenue Service urges members of the public and all stakeholders to disregard misinformation and to rely exclusively on official communications for accurate, authoritative, and up-to-date tax information,” the statement added.
