FG Implements 7.5% VAT on Electronic Service Charges

Federal authorities have mandated that all banking institutions and financial technology companies collect and remit 7.5 percent value-added tax on designated electronic banking services, with implementation commencing Monday, January 19, 2026, according to email notifications distributed by payment platforms to customers.

The taxation requirement applies to electronic banking service charges, encompassing mobile money transfer fees, USSD transaction charges, and card issuance costs, according to a Wednesday email communication shared with clientele by Moniepoint.

Specifically, the VAT assessment targets service fees rather than transferred funds—illustrated by a scenario where a N100 transfer charge incurs 7.5 percent VAT applied to that N100 fee, not the actual monetary amount being transmitted.

“From Monday, January 19, 2026, we are required to collect a 7.5 per cent VAT, to be remitted to the Nigerian Revenue Service (formerly known as the Federal Inland Revenue Service),” the email notification stated.

“VAT will apply to certain banking services that include electronic banking charges such as mobile banking fees (transfers), USSD transaction fees, and card issuance fees,” the email read.

Additional financial service operators are anticipated to distribute comparable customer notifications during upcoming days. Services maintaining exemption status include interest accrued on deposits and savings accounts, ensuring customers avoid taxation on account returns.

The Nigerian Revenue Service (NRS), previously designated as the Federal Inland Revenue Service, has established the implementation deadline to guarantee compliance from all commercial banks, microfinance banks, and electronic money operators regarding collection and remittance obligations.

Moniepoint emphasized that the change constitutes statutory obligation fulfillment rather than discretionary pricing adjustment. “Moniepoint is required to collect and remit VAT to the Nigerian Revenue Service,” the company stated.

The directive forms part of governmental efforts to standardize VAT collection protocols on digital financial services while expanding revenue generation capacity amid Nigeria’s expanding digital economy. VAT application to banking transactions carries historical precedent; the NRS now enforces uniform collection frameworks across all platforms, ensuring sector-wide compliance consistency.

Customers received assurances that the new taxation will feature transparent itemization, with VAT displayed separately on transaction statements and financial reports.

In December, multiple commercial banks notified customers that N50 stamp duty would be deducted on electronic transfers of N10,000 and above, following new Tax Act provision activation.

The charge, previously identified as EMTL, has undergone formal reclassification as stamp duty and will be implemented as a one-time fee on qualifying electronic transfers.

The VAT implementation on banking service charges reflects broader fiscal policy shifts aimed at capturing revenue from Nigeria’s rapidly digitalizing financial services sector, where electronic transaction volumes have expanded exponentially while traditional taxation frameworks struggled to effectively monitor and extract revenue from digital payment flows.

For consumers, the cumulative tax burden on digital financial services continues escalating—combining the 7.5 percent VAT on service charges with the N50 stamp duty on transfers exceeding N10,000—potentially influencing transaction behavior and platform selection preferences as cost-conscious users evaluate total transaction expenses across competing service providers.

The enforcement uniformity represents NRS efforts to eliminate competitive distortions where inconsistent VAT collection created pricing advantages for non-compliant operators while disadvantaging compliant institutions, though implementation effectiveness will depend on monitoring capabilities across Nigeria’s diverse and fragmented fintech landscape.

The revenue expansion strategy carries risks of inadvertently constraining digital financial inclusion objectives if incremental costs deter marginal users from formal financial system participation, particularly among lower-income populations for whom transaction fees constitute proportionally significant expenses relative to transaction values.