FG begins VAT collection on USSD, mobile transfers as banks notify customers
Commercial banks and fintech companies, including Moniepoint, have started informing customers of the Federal Government’s decision to enforce a 7.5 per cent Value Added Tax (VAT) on selected electronic banking services, notably USSD transactions and mobile transfers.
Customer alerts issued on Wednesday indicate that the policy will take effect from Monday, January 19, 2026. The directive was issued by the Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS).
Under the new regime, all commercial banks, microfinance banks and fintech platforms are required to collect and remit VAT on applicable service charges related to electronic transactions. The tax will be applied strictly to the service fee charged by financial institutions, and not on the actual amount being transferred.
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For example, if a bank charges a ₦100 fee for a transaction, an additional ₦7.50 VAT will be applied to that fee, while the principal sum being sent remains unaffected.
In separate notices to customers, financial institutions clarified that the VAT implementation is a statutory requirement and not an increase initiated by banks or fintech operators. They also assured customers that VAT charges would be clearly itemised on transaction receipts for transparency.
The NRS further stated that interest earned on savings and deposit accounts remains VAT-exempt, easing concerns over broader taxation of banking services.
The policy forms part of the government’s efforts to expand tax compliance within Nigeria’s fast-growing digital financial services sector, in line with broader fiscal reforms under the Nigeria Tax Act 2025.
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With millions of Nigerians relying daily on USSD codes and mobile banking for payments and transfers, the development is expected to have a widespread impact as financial institutions begin full implementation later this month.
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