Abuja: The Nigeria Revenue Service (NRS) has dispelled circulating reports about the imposition of Value-Added Tax (VAT) on banking services, including electronic money transfers, fees, and commissions. Mr. Dare Adekanmbi, the Special Adviser on Media to Dr. Zacch Adedeji, the Executive Chairman of NRS, issued a statement in Abuja addressing these claims as incorrect and misleading.
According to News Agency of Nigeria, Mr. Adekanmbi clarified that VAT has traditionally applied to banking services and was not newly introduced under the Nigeria Tax Act. He emphasized that the Act did not introduce any new VAT obligations on banking charges or any additional tax responsibilities for customers.
‘The Nigeria Revenue Service (NRS) wishes to address and correct misleading narratives circulating in sections of the media suggesting that VAT has been newly introduced on banking services, fees, commissions, or electronic money transfers. This claim is categorically incorrect,’ he stated. He further reiterated that VAT has always been applicable to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s established VAT framework.
Mr. Adekanmbi urged the public and all stakeholders to disregard misinformation and rely on official communications for accurate tax information. The statement also included a list of Frequently Asked Questions (FAQs) on VAT to provide further clarity on areas of concern for Nigerians.
In response to some frequently asked questions, Mr. Adekanmbi explained that VAT applies to commissions, fees, and charges for services rendered by banks and other financial institutions, such as transfer fees, USSD charges, card issuance fees, and account maintenance fees. He noted that VAT is not charged on the amount of money transferred or withdrawn but only on the service charge or commission imposed by the bank.
He clarified that interest earned on savings accounts, fixed deposits, and similar accounts is not subjected to VAT, as interest income is not considered a supply of goods or services. Furthermore, the Nigeria Tax Act exempts basic food items and essential goods from VAT to protect consumers and reduce living costs.
He also highlighted that essential medical services and pharmaceutical products, as well as educational services provided by recognized institutions, are VAT-exempt under the Act. Mr. Adekanmbi concluded that the changes relate to compliance and enforcement, not the law itself, reminding financial institutions of their obligation to remit already charged VAT in line with the Act. Claims suggesting otherwise, he noted, are misleading and incorrect.