Bank Charges VAT Explained, NRS Confirms No Tax on Transfers
Bank Charges VAT Explained, NRS Confirms No Tax on Transfers. Amid rising public concern, the Nigeria Revenue Service has issued a clear explanation on bank transfer VAT in Nigeria, confirming that customers are not being taxed on the money they send or receive. The agency explained that the existing 7.5 percent Value Added Tax applies only to bank service charges and not to the actual amount transferred.
This clarification became necessary after several banks and fintech platforms announced the commencement of VAT deductions on electronic banking fees, which many Nigerians misunderstood as a new government levy on transfers. According to the NRS, the Nigeria Tax Act of 2025 did not introduce any additional burden on customers, it simply reinforces proper compliance by financial institutions regarding taxes that already exist.
To make the explanation relatable, the NRS noted that if a bank charges a ₦10 transfer fee, VAT is calculated solely on that fee, adding just ₦0.75, while the transferred sum remains completely unaffected. The service also reassured Nigerians that key exemptions remain firmly in place, including interest on savings and investment accounts, as well as essential goods and services such as basic food items, healthcare, pharmaceuticals, and approved educational fees.
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As the transition from the former FIRS to the NRS continues, the government insists the reform is aimed at eliminating multiple taxation and improving efficiency, not discouraging digital banking or financial inclusion, even as stakeholders continue to monitor its real world impact.