By Seun Olayemi, Reporting
AS Nigeria prepares for the enforcement of the 7.5 per cent Value Added Tax (VAT) on electronic banking transactions from Monday, January 19, 2025, a staff member of the Nigerian Revenue Service (NRS) has clarified that the tax does not apply to the actual amount transferred by customers, but to the service charges imposed by banks and fintech platforms.
Speaking on condition of anonymity, the NRS official explained that public anxiety surrounding the reform stems largely from misinformation circulating on social media.
“The VAT is calculated strictly on the transaction or service fee charged by the financial institution, not on the money being transferred,” the official said.
According to the source, commercial banks have historically deducted VAT on transaction charges and remitted the same to the Federal Inland Revenue Service (FIRS).
However, the recent tax reform introduces stricter enforcement across financial technology companies, including Moniepoint, OPay, Kuda and similar platforms, which were previously not fully remitting VAT collected on service charges.
The source further disclosed that fintech companies had retained VAT collected on customer charges, unlike commercial banks that consistently remitted such taxes to government coffers.
Under the new compliance framework, fintech operators are now required to remit VAT directly to the NRS, in line with broader revenue harmonisation efforts.
An example cited by the source explained that if a bank charges ₦50 as a transfer fee, the applicable VAT would be ₦3.75, representing 7.5 per cent of the charge. This is in addition to existing statutory levies such as the Electronic Money Transfer Levy (EMTL), where applicable.
The anonymous official stressed that the policy does not introduce a new tax burden on customers but rather ensures uniform tax compliance across Nigeria’s banking and digital finance ecosystem.
“The concern being raised by some fintech operators is largely about enforcement and remittance obligations, not the tax itself,” the source added.
The government has urged Nigerians to remain calm and seek accurate information, as the policy is part of a broader effort to plug revenue leakages, improve transparency, and strengthen the nation’s tax administration system.
Explanatory notices and illustrative materials from financial institutions are attached to this report.
What's your reaction?
