NEWS ALERT!!! Banks To Start Deduction Of 7.5% VAT Charges On Cash Transfers And USSD From Monday
The Federal Government has directed all commercial banks, microfinance institutions and fintech platforms to begin the collection and remittance of a 7.5 per cent Value-Added Tax (VAT)on selected electronic banking service fees.
The directive, which takes effect on Monday, January 19, 2026, applies to charges incurred on electronic transactions rather than the actual amount being transferred.
The Nigerian Revenue Service, formerly known as the Federal Inland Revenue Service, said the move is part of efforts to standardise tax collection within Nigeria’s fast-growing digital economy.
Naija News reports that under the directive, financial institutions are required to deduct VAT strictly from the service fee charged on transactions. For example, a transfer fee of ₦100 will now attract an additional ₦7.50 as VAT.
In an email notice sent to customers on Wednesday, fintech firm Moniepoint confirmed the directive and explained how it would affect users.
“From Monday, January 19, 2026, we are required to collect a 7.5 per cent VAT, to be remitted to the Nigerian Revenue Service (formerly known as the Federal Inland Revenue Service),” the company stated.
The firm further outlined the categories of banking services that would be affected by the tax.
“VAT will apply to certain banking services that include electronic banking charges such as mobile banking fees (transfers), USSD transaction fees, and card issuance fees,” Moniepoint added.
According to details of the mandate, the VAT will apply to mobile money transfers, USSD sessions and card issuance fees.
However, interest earned on savings and deposit accounts remains exempt from the tax.
The NRS also mandated financial institutions to ensure transparency by clearly itemising VAT charges on transaction receipts and account statements, enabling customers to easily track deductions.
The enforcement of VAT on electronic banking service charges follows the implementation of the new Tax Act, under which banks recently reinstated the ₦50 stamp duty, formerly known as the Electronic Money Transfer Levy, on electronic transfers of ₦10,000 and above.
Although VAT on banking services is not entirely new, the NRS is now insisting that fintech platforms and traditional banks comply with the same remittance rules to close existing revenue gaps.
As the January 19 implementation date approaches, customers are expected to receive similar notifications from other fintech platforms and conventional banks, outlining how the VAT deductions will be applied to applicable electronic banking services.
