Reported by: Ijeoma G | Edited by: Gabriel Osa
Nigeria is set to introduce a 7.5 per cent Value Added Tax (VAT) on selected electronic banking services, a move that will affect millions of consumers and businesses across the country when it takes effect Monday, January 19, 2026. The change, mandated by tax authorities and communicated through customer notices from financial service providers, reflects a broader regulatory shift aimed at expanding the nation’s tax base in line with its rapidly digitalising economy.
Under the directive, banks, microfinance institutions and fintech operators are required to collect and remit VAT on specific service charges tied to digital financial transactions. According to the notices, the tax will be applied to fees associated with mobile bank transfers, Unstructured Supplementary Service Data (USSD) transactions and card issuance charges — common services that Nigerians use on a daily basis for personal and business banking.
Financial technology companies such as Moniepoint have informed users of the impending tax, stressing that it is a regulatory requirement rather than a voluntary price increase by the service providers themselves. Notices sent to customers emphasise that the VAT will be itemised separately on transaction statements, ensuring transparency in how the new charge is applied.
The VAT will not be levied on all banking activities, but is specifically tied to service fees charged by financial institutions, rather than the principal amounts being transferred or funds held in customer accounts. For example, if a service provider charges ₦25 as a transfer fee, the 7.5 per cent VAT will be calculated on that fee alone, adding approximately ₦1.88 to the cost of the service.
Authorities have also clarified that certain transactions will remain exempt from the tax, most notably interest earned on savings and deposit accounts. This exemption is intended to protect earnings on personal savings and support financial inclusion among depositors, although the broader impact on banking behaviour remains to be seen.
Compliance with the new VAT regime is being enforced across all segments of the financial sector, including commercial banks, microfinance banks and electronic money transfer operators. Customers will begin to see the tax reflected in their account statements shortly after the policy takes effect, with institutions preparing systems and communications to accommodate the change.
The introduction of VAT on selected banking service charges comes as part of a series of tax reforms aimed at modernising Nigeria’s revenue generation mechanisms. These reforms seek to capture a broader swathe of economic activity, particularly in the digital domain, where financial transactions have grown substantially in recent years. By expanding the VAT base to include digital banking fees, authorities aim to increase fiscal revenues without directly targeting wage or corporate income.
Officials have described the move as essential to adapting the nation’s tax structure to the realities of a cashless society, where conventional revenue sources have been under strain and digital financial services have become integral to daily life. However, implementation at the outset will require careful coordination between government agencies and financial institutions to ensure compliance and minimise confusion among consumers.
The announcement of the VAT on banking services has elicited a range of responses from industry observers, consumer advocates and ordinary Nigerians. Many users express concern that the additional tax — while relatively modest on individual transactions — could cumulatively increase the cost of managing money, particularly for low-income individuals and small-business owners who rely heavily on mobile and USSD banking.
Critics argue that the VAT could dampen financial inclusion efforts by making digital banking services less affordable for vulnerable populations. Advocates for greater transparency have urged financial service providers and regulators to engage in clear public communication to prevent misunderstandings about which transactions will be taxed and how the charges will appear on statements.
Some industry stakeholders have also raised the prospect of legal challenges or calls for further clarification, particularly in areas where fee structures overlap with other levies or charges already imposed on banking services. Disputes over multiple fee layers — including stamp duties and electronic money transfer levies enacted under previous legal frameworks — have previously sparked public debate over the cumulative cost of digital financial services in Nigeria.
For everyday users, the most immediate impact of the new VAT regime will be on the overall cost of conducting routine financial transactions. With mobile and USSD channels widely used across Nigeria for cash transfers, bill payments and other financial activities, even a small percentage tax could represent a noticeable increase in monthly banking costs for frequent users.
Financial analysts suggest that the policy could prompt consumers to reassess their transaction habits, potentially favouring channels or products with lower or bundled fee structures. Banks and fintech companies, for their part, may face pressure to innovate around pricing and service delivery to maintain competitiveness and customer loyalty in a more cost-sensitive environment.
At a macroeconomic level, the added revenue generated from the expanded VAT base could provide additional funding for public services and infrastructure projects, helping to ease budgetary constraints. However, the effectiveness of this approach will depend on efficient tax collection, accountability in public spending and sustained economic growth to offset rising consumer costs.
In the weeks leading up to the January 19 deadline, financial institutions have been updating their systems and issuing guidance to customers to ensure a smooth transition. Banks and fintech platforms are expected to provide detailed information on how the VAT will be reflected in account activity records, offering greater transparency on how fees are calculated and applied.
Financial literacy advocates recommend that consumers review their banking habits in light of the upcoming changes, paying particular attention to recurring transaction costs and exploring options that may offer more favourable terms. As the new tax comes into force, its broader influence on Nigeria’s digital economy and financial inclusion landscape will become clearer.
📩 Stone Reporters News | 🌍 stonereportersnews.com
✉️ info@stonereportersnews.com | 📘 Facebook: Stone Reporters | 🐦 X (Twitter): @StoneReportNew | 📸 Instagram: @stonereportersnews
Add comment
Comments