Nigeria Clarifies VAT on Bank and Fintech Fees

On January 15 and 16, the Nigerian Federal Government and the Nigeria Revenue Service (NRS) directed all banks and fintech companies to charge and remit VAT on the service fees they collect from customers, and clarified that there is no new tax on bank customers under the Nigeria Tax Law on bank customers, respectively.

Implications for Banks, Fintechs, and Customers

Under the new rules, the Nigerian Revenue Service, formerly known as the Federal Inland Revenue Service (FIRS), enforced a 7.5% VAT remittance on fees and commissions from banking and financial services, with the regulation taking effect immediately on January 19, 2026.

In its announcement, the government underlined that the main drivers of this decision are strengthening the tax system, enhancing transparency, and supporting national development. Moreover, the Nigerian government urged financial sector stakeholders to cooperate for a smooth implementation. However, the announcement left many confused, as it was unclear whether VAT had been newly introduced on banking services.

To address growing concerns, primarily from customers, the NRS clarified that VAT on electronic transfers and banking fees is not a new tax but has long been part of Nigeria’s financial regulations. Additionally, the NRS underlined that VAT applies only to service fees such as transfer charges, USSD fees, card issuance, and account maintenance, while the funds customers transfer are not taxed, and the Nigeria Tax Law does not introduce any new obligations for bank customers.

What is most important for customers is that interest earned on savings accounts, fixed deposits, and similar deposit products is not subject to VAT because it does not qualify as a supply of goods or services. The NRS noted that under the Tax Law, interest income is treated as a return on deposited funds rather than consideration for a taxable service.

Conclusion

As highlighted in the NRS public statement, it rejected misleading media reports. It reaffirmed that VAT has always applied to fees, commissions, and service charges by banks under the country’s established VAT system. Given the degree of public concerts, the latest NRS announcement showcases the importance of relying on official sources for accurate, up-to-date information on tax matters. 

Source: NALTF - Federal Government Directs Banks, Fintechs to Remit VAT on Service Fees, NALTF - Nigeria Revenue Service (NRS) Clarifies VAT on Banking Services