By Seun Olayemi, Reporting
FOLLOWING widespread public concern over the enforcement of the 7.5 per cent Value Added Tax (VAT) on electronic transactions, the Nigeria Revenue Service (NRS) has released official Frequently Asked Questions (FAQs) to clarify misconceptions surrounding the policy.
Below are additional clarifications, based on official NRS guidance and expert explanations.
Q1: Is VAT charged on banking services?
A: Yes. According to the NRS, VAT is applicable where a fee or commission is charged for a service.
VAT applies to commissions, fees, and charges for services rendered by banks and other financial institutions, including:
Transfer fees
USSD charges
Card issuance fees
Account maintenance fees
Similar service-related charges
This position has always existed under Nigerian VAT law and was not introduced by the recent tax reforms.
*Q2: Is VAT charged on the money I transfer?*
A: No. VAT is not charged on the principal amount (the money being sent). It applies only to the service fee charged by the bank or fintech platform.
*Q3: Why are people saying the government is taking 7.5% of every transfer?*
A: This is a misinterpretation. The confusion arises from misunderstanding how VAT is calculated. VAT is 7.5 per cent of the service charge, not 7.5 per cent of the transferred funds.
*Q4: Has VAT always applied to banks?*
A: Yes. Commercial banks have always charged VAT on service fees and remitted it to the tax authority, previously the Federal Inland Revenue Service (FIRS), now the Nigeria Revenue Service (NRS).
*Q5: What has changed with fintech companies?*
A: The key change is enforcement and compliance.
While fintech platforms such as Moniepoint, OPay, Kuda, and others have charged VAT on service fees, the VAT was often retained by the platforms.
Under the new enforcement regime, fintech companies are now required to remit VAT to the NRS, just like commercial banks.
*Q6: Is this why fintech companies are raising concerns?*
A: According to an NRS staff member who spoke anonymously, the concerns are largely due to stricter remittance requirements, not because a new tax has been introduced.
*Q7: Will customers now pay more?*
A: Customers may notice clearer VAT deductions on service charges, but the VAT itself is not new. The total cost remains tied to the bank’s or fintech’s service fee structure.
*Q8: Does this affect USSD transactions?*
A: Yes. VAT applies to USSD service charges, just as it does to other banking service fees.
*Q9: Does VAT replace other charges like stamp duty?*
A: No. VAT is separate from existing charges such as the Electronic Money Transfer Levy (EMTL). Both may apply independently where relevant.
*Q10: What should Nigerians do to avoid misinformation?*
A: Nigerians are advised to:
Verify information from official NRS communications
Understand that VAT targets service charges, not savings or transfers
Ignore exaggerated claims suggesting the government is taxing personal funds directly
NRS Contact Information (as stated in the official FAQ):
HelpDesk Line: 02094602700
Email: helpdesk@nrs.gov.ng
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