Bank charges subject to VAT, but no new tax for customers – NRS

The Nigeria Revenue Service (NRS) has dismissed reports suggesting that Value-Added Tax (VAT) has been newly imposed on banking services, calling such claims false and misleading.

In a statement on Thursday, the agency emphasized that VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions, and that the recently enacted Nigeria Tax Act did not introduce VAT on banking charges or impose any new tax obligations on customers.

The NRS explained that VAT applies only to service charges such as transfer fees, USSD charges, card issuance fees, and account maintenance fees, and not to the amount of money transferred or withdrawn. Interest earned on savings accounts, fixed deposits, and similar deposit accounts is not subject to VAT, and essential goods, basic food items, medical products, and educational services remain exempt under the Act.

According to the agency, the recent changes relate to compliance and enforcement, reminding financial institutions of their obligation to remit VAT already collected rather than creating new taxes.

The NRS urged the public to rely solely on official communications for accurate tax information, stressing that claims of a new VAT burden on ordinary Nigerians are misleading and incorrect.