The Nigeria Revenue Service, NRS, has denied reports suggesting that the Federal Government has introduced a new Value Added Tax, VAT, on banking services, insisting that VAT on such charges has existed under Nigeria’s tax framework long before the new tax law.
NRS’ clarification comes amid widespread public criticism following a directive mandating banks and financial technology, Fintech, companies to apply 7.5 per cent VAT to certain electronic banking charges from January 19.
The development has sparked concern among customers, many of whom interpreted the move as the introduction of a fresh tax burden on digital transactions.
In an official statement, the NRS urged members of the public to disregard what it described as misleading narratives circulating in sections of the media.
The agency stressed the need for stakeholders to rely solely on official communications for accurate and authoritative tax information.
According to the Service, “The Nigeria Revenue Service 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 NRS explained that VAT has always been applicable to fees, commissions and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime. It maintained that the Nigeria Tax Act did not introduce VAT on banking charges nor impose any new tax obligation on customers.
“VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions. 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 added.
Earlier, tax authorities had directed banks and Fintech firms to begin charging VAT on specific electronic banking services, including mobile banking and Unstructured Supplementary Service Data, USSD, transactions.
Clarifying the scope of the charge, the notice to the banking public stated that VAT would apply only to service charges and not to the principal amount transferred.
