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The Digest:

As Nigerian banks begin implementing a 7.5 percent Value Added Tax on service charges, many customers are seeking clarity on what exactly will be taxed, and what won’t. Contrary to widespread concerns, the NRS has clarified that VAT applies only to the fees banks charge for services, not to the actual money being transferred or withdrawn, marking a critical distinction in an already financially strained environment.

Key Points:
  • Banks will start deducting 7.5% VAT on service charges like POS fees, mobile transfer fees, and USSD charges from January 19.
  • The tax applies only to the service fee, not the principal transaction amount.
  • Example: On a ₦50 transfer charge, VAT is ₦3.75, not on the transferred sum.
  • The NRS states this is not a new tax but better enforcement of an existing VAT regime.
  • Affected charges include card issuance, SMS alerts, account maintenance, and electronic banking fees.
  • Moniepoint MFB notified customers that all financial institutions must comply by the deadline.
  • The move aims to increase VAT remittance but has sparked confusion over applicability.
In a climate where every additional charge feels significant, this policy's fine print draws a line between revenue enforcement and customer burden—a reminder that clarity is as important as compliance.

Sources: The Cable, Business Day