FG Orders Banks and Fintech to Charge 7.5% VAT on Mobile and USSD Transfers
In a major move to bolster domestic revenue generation, the Federal Government of Nigeria has issued a definitive directive ensuring that the 7.5% VAT on Mobile and USSD Transfers is strictly implemented across all financial institutions.
This mandate, communicated through the Federal Inland Revenue Service, FIRS, compels traditional commercial banks and prominent fintech platforms like Moniepoint, OPay, and Palmpay to apply Value Added Tax on the service fees charged for digital transactions. While the tax is not a new law, the recent enforcement order clarifies that the 7.5% levy must be deducted specifically from the “convenience fees” or “transaction charges” paid by customers, rather than the principal amount being transferred.
The directive targets the rapidly growing digital payment ecosystem, particularly focusing on mobile app transfers and Unstructured Supplementary Service Data, USSD, services which millions of Nigerians rely on for daily commerce. According to the government’s fiscal strategy, this move is designed to capture revenue from the high volume of electronic micro-transactions that have previously slipped through the cracks of the traditional tax net.
For the average user, this means that if a bank charges twenty-five Naira for a transfer, an additional 7.5% tax will be applied to that fee, making the total cost slightly higher. Financial analysts suggest that while the amount per transaction appears negligible, the cumulative effect across billions of monthly transactions will provide a significant boost to the national treasury.
Leading fintech companies have already begun notifying their customers of this compliance phase, which took effect in mid-January 2026. Platforms like Moniepoint, which have become a staple for small business owners and roadside traders, are now legally required to remit these collections to the federal government.
The enforcement has sparked a wave of conversation regarding the rising cost of digital banking in Nigeria, as users are already burdened by Electronic Money Transfer Levies, EMTL, and various maintenance fees. However, the FIRS maintains that the 7.5% VAT on Mobile and USSD Transfers is a statutory obligation under the Value Added Tax Act, and financial service providers are merely acting as collection agents for the state.
As the implementation scales nationwide, the government is urging citizens to view the move as a necessary step toward funding critical public infrastructure and social intervention programs. Critics, on the other hand, worry that the additional costs might discourage financial inclusion among the unbanked and underbanked populations who are sensitive to even minor price hikes.
Despite these concerns, the transition appears absolute, with the Central Bank of Nigeria expected to monitor compliance strictly. For now, Nigerians must brace for a slight increase in the cost of moving money digitally, as the government tightens its grip on the digital economy to meet its ambitious revenue targets for the 2026 fiscal year.