Effective Monday, January 19, 2026, many Nigerians will see a 7.5% value-added tax (VAT) added to certain banking service charges, including fees for mobile/app transfers, USSD transactions, and some POS-related charges. The key point is this: VAT is applied to the bank’s service fee, not to the amount of money you send, withdraw, or receive.
According to the email communication Moniepoint Microfinance Bank sent to its customers on Thursday, the 7.5% VAT will be remitted to the Nigerian Revenue Service (NRS).
“The NRS has communicated a deadline of 19th January for all financial institutions (commercial banks, microfinance banks and electronic money transfer operators) to start collecting and remitting VAT,” the statement read.
In this Blknow explainer, we break down what is changing, what is not, and what to watch for on your receipts and statements.
First, what exactly is being taxed?
Banks and other financial institutions provide “banking services” that often come with transaction fees and service charges such as transfer charges, USSD fees, card issuance fees, account maintenance, SMS alerts, and POS transaction/activation fees. VAT applies to many of these fees and commissions as services rendered.
In practical terms, what you’ll notice is an extra 7.5% of the service charge added to eligible fees.
Is this a new tax?
Nigeria’s revenue authorities say NO. VAT has long applied to fees, commissions, and charges banks collect for services. The federal government’s argument is that the change is in compliance and enforcement, with financial institutions required to collect and remit VAT more consistently and to clearly show it on statements.
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What the 7.5% VAT will be calculated on
The VAT is charged on the service fee, not the main transaction amount.
Here is a simple explanation: if you transfer ₦50,000 and the bank charges ₦50 as the transfer fee, VAT is 7.5% of ₦50 (that is ₦3.75). Your total debit becomes:
₦50,000 (transfer amount) + ₦50 (service fee) + ₦3.75 (VAT) = ₦50,053.75
The same logic applies to POS charges: if a POS transaction fee is ₦100, VAT adds ₦7.50 to the fee, not to the value of the purchase or withdrawal.
Which services are likely to attract VAT?
What you should expect, based on guidance already circulated to customers, is VAT on service fees such as:
- POS transaction fees and some POS issuance/activation-related fees
- Mobile/electronic banking transfer fees (app transfers, mobile money transfers)
- USSD transaction fees
- Card issuance fees
- Other “service charge” items that show up on many accounts, including account maintenance and SMS alerts
- In some cases, fees are tied to processes such as loan processing/documentation (VAT applies to the processing/documentation services, not to loan interest).
Your exact exposure will depend on how often you transact and what your bank/fintech charges for each service.
Which items should not attract VAT?
Revenue guidance and customer notices have been consistent on a major exemption: interest is not vatable. That means:
- Interest on deposits and savings does not attract VAT
- Interest on loans and advances does not attract VAT
So if your bank pays you interest on a savings or fixed deposit account, VAT is not charged on that interest.
Why some Nigerians will feel it more than others
Even though VAT is calculated on the fee (not the amount transferred), it can bite harder for people who rely heavily on high-frequency, small-value transactions, especially those who do multiple USSD transfers daily or rely on POS for cash-outs and payments. The tax may look small per transaction, but it accumulates over time.
“Is my bank increasing fees?”
Many banks are telling customers this is not a fee hike; it is the addition of a government tax to eligible service charges, collected and remitted to the tax authority.
That distinction matters. Your bank’s base transfer fee may remain the same, but your total debit can still rise because VAT is now being shown and applied more consistently.
How to verify what you’re being charged
From January 19, check your:
- Receipt after transfers/POS transactions
- Transaction notifications (SMS/app alerts)
- Monthly account statement
Where applicable, VAT should appear as a separate line item associated with the relevant service fee, rather than being included in the transfer amount.
What to do if a deduction looks wrong
If you see VAT charged on the principal amount (the money you sent/withdrew) rather than on the service fee, document it:
- Screenshot the receipt/statement line
- Note the time, amount, and reference
- Contact your bank/fintech support for clarification
Official guidance is clear that VAT should apply to service fees, not the transferred amount.
