By Our Correspondent
Nigerians will begin paying a 7.5 percent Value Added Tax on certain digital banking service charges starting January 19, following a directive by the Federal Government to banks and financial technology companies.
Under the new policy, the VAT will apply to fees charged on mobile banking transfers, USSD transactions, and other electronic payment services. The tax will not be deducted from the actual amount being transferred. Instead, it will be added only to the service fee charged by the bank or fintech platform for processing the transaction.
For example, if a bank charges ₦100 as a transfer fee, customers will now pay an additional ₦7.50 as VAT, bringing the total charge to ₦107.50. Financial institutions are required to display the VAT as a separate line item on transaction receipts and account statements for transparency.
The directive affects commercial banks, microfinance banks, and fintech operators, including popular digital payment platforms. These institutions are mandated to collect the VAT on behalf of the government and remit it to the appropriate tax authority.
According to government sources, the move is aimed at expanding the tax base and ensuring uniform VAT compliance within Nigeria’s rapidly growing digital financial services sector. Authorities maintain that the policy aligns with existing tax laws, which already subject financial service fees to VAT.
However, the announcement has sparked public concern, with many Nigerians worried about the cumulative impact on everyday banking costs, especially for low-income earners who rely heavily on USSD and mobile transfers. Consumer groups and industry stakeholders have also raised questions about affordability and the risk of overburdening users with additional charges.
As the implementation date approaches, banks and fintech companies are expected to notify customers formally and update their pricing structures to reflect the new VAT requirement.
