Banks Begin 7.5% VAT on Transfers, USSD, Other Fees from Jan 19

Nigerians will begin paying 7.5 per cent Value Added Tax (VAT) on selected banking service charges from January 19, 2026, following the implementation of new tax regulations.

The VAT applies to banking fees, including mobile transfers, USSD transactions, card issuance, withdrawals, SMS alerts and other service charges, and not on the actual amount transferred or withdrawn.

The development was disclosed in customer notices issued by some financial institutions, including Moniepoint, and corroborated by reports on platforms such as Sahara Reporters and Nairaland.

Under the new arrangement, banks will collect the VAT on applicable service fees and remit it to the Nigerian Revenue Service, in line with existing tax laws.

How the VAT Will Apply

The VAT is calculated only on the transaction fee, not the principal amount.

For instance, on Moniepoint, a transfer attracts a ₦20 fee. With the addition of 7.5 per cent VAT, customers will now be charged ₦21.50.

This means:

Transfer fee: ₦20

VAT (7.5%): ₦1.50

Total charge: ₦21.50

Withdrawal Charges Explained

For cash withdrawals, a typical example shows that when a customer withdraws ₦50,000, Moniepoint charges ₦100, while the Central Bank of Nigeria (CBN) previously deducted ₦50.

With the VAT now applied, and if the CBN charge is no longer deducted, customers will see a debit of ₦107.50, reflecting the ₦100 fee plus 7.5 per cent VAT.

Applies to SMS, USSD, Other Banking Services

The VAT also applies to:

SMS alerts

USSD transactions

Card issuance and maintenance fees

Other eligible banking service charges

However, interest earned on savings and deposit accounts remains exempt from VAT.

Banks to Collect, Government to Receive

The tax is not a new charge by banks but a statutory levy mandated by law, with financial institutions acting as collection agents on behalf of the government.

Customers have been advised to take note of the changes to better understand future transaction charges.