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As confusion surrounds the notice from some commercial banks informing customers of their intention to collect 7.5 per cent Value-Added Tax on various electronic transactions, the Nigeria Revenue Service (NRS) has asked anxious depositors to calm down, clarifying that 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.
A statement by Dare Adekanmbi, Special Adviser on Media to the NRS chairman, Zacch Adedeji, explained that “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 Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard.
“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 said.
Adekanmbi added that VAT is not charged on the amount of money transferred or withdrawn.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.
“For example, if a bank charges N10 for a transfer, VAT of 7.5% (N0.75) applies to that N10 charge, not to the amount being transferred.
The statement noted that interest earned on savings accounts, fixed deposits, and similar bank deposits is not subject to VAT, according to the Nigeria Tax Act, 2025.
The law clarifies that interest income does not constitute a supply of goods or services and therefore cannot attract VAT.
Similarly, basic food items and essential goods remain VAT-exempt, a measure intended to protect consumers and help reduce the cost of living. The exemptions are explicitly listed under the Act’s VAT provisions.
Medical services and pharmaceutical products** also continue to enjoy VAT exemption, ensuring that access to healthcare remains affordable. Core educational services, including tuition provided by recognised institutions, are likewise excluded from VAT.
What has changed with the 2025 Act is not the imposition of new taxes, but rather the emphasis on compliance and enforcement. Financial institutions are now being reminded of their obligation to properly remit VAT already charged and collected from customers, in accordance with the existing law.
Officials stress that the Nigeria Tax Act does not introduce any new VAT burden on ordinary Nigerians. Savings, essential food items, medical care, and educational services are all explicitly exempt, and any claims suggesting otherwise are misleading and incorrect.
The clarification aims to dispel confusion in the public discourse about VAT, reinforcing that the law’s recent focus is on ensuring adherence to established obligations rather than expanding the scope of taxable goods and services.
