7.5% VAT on Mobile Transfers: Nigerian Revenue Service Clarifies Who Really Pays

The Nigerian Revenue Service has clarified widespread concerns surrounding the recently announced 7.5 percent Value Added Tax on mobile transfers and other electronic banking services, stating that the tax will be borne by banks and financial technology companies, not individual customers.

The clarification follows growing public confusion triggered by notices issued by banks and fintech platforms ahead of the implementation date. According to the revenue authority, the VAT does not apply to the value of customer transactions but only to the service charges imposed by financial institutions.

A senior official of the Nigerian Revenue Service, who participated in policy discussions, explained that the tax is strictly limited to charges earned by banks on transfers and related services. For example, where a bank charges a fixed stamp duty or service fee on a transaction, the VAT applies only to that fee and not to the amount transferred by the customer.

The official stressed that the policy does not introduce an additional tax burden on Nigerians, noting that customers will not pay extra VAT on their transfer amounts. Instead, the obligation rests with banks and fintech companies to remit the applicable tax on their service charges to the government.

The clarification comes after several financial institutions circulated customer notices announcing that a 7.5 percent VAT would take effect from January 19, 2026. The notices stated that the VAT would apply to certain electronic banking services, including mobile transfers, USSD transactions and card related fees, in line with regulatory requirements.

However, the revenue authority emphasized that the VAT is not a price increase imposed on customers, nor does it affect interest earned on savings or deposit accounts, which remain exempt from VAT. The tax is expected to appear separately on transaction statements as part of banks’ reporting obligations.

According to the Nigerian Revenue Service, misunderstandings surrounding the policy were largely fueled by how the notices were communicated, leading to speculation that Nigerians would face higher costs for routine banking transactions. The agency reassured customers that the regulation is designed to ensure compliance by financial institutions rather than impose new charges on users.

Banks, microfinance institutions and fintech companies are expected to begin full implementation and remittance of the VAT from January 19, 2026, in accordance with the directive.

While existing charges such as transfer fees, card maintenance fees and transaction alerts remain in place, the revenue authority reiterated that the VAT component applies only to the service income earned by banks. Customers are therefore advised to rely on official guidance and avoid misinformation regarding the policy.

The clarification is expected to ease concerns among individuals and small businesses that rely heavily on digital banking and mobile payment platforms, as authorities continue to fine tune tax administration within Nigeria’s financial services sector.