7.5% VAT on Electronic Banking: FG Orders Banks, Fintechs to Comply

The Federal Government of Nigeria has directed banks and financial technology (fintech) companies to begin collecting a 7.5% Value-Added Tax (VAT) on electronic banking services starting Monday, January 19, 2026.

This new rule affects common banking charges such as mobile money transfer fees, USSD transaction charges, and card issuance fees. The directive is being implemented through the Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS).

If you use digital banking services in Nigeria, this update directly affects you. Below, MikeTech explains the 7.5% VAT on electronic banking in simple terms so everyone can understand what is changing and why.

What the 7.5% VAT on Electronic Banking Means

From January 19, 2026, all banks, microfinance institutions, and fintech platforms (Moniepoint, Opay, MTN MoMo PSB, etc) are required by law to add 7.5% VAT to certain electronic banking service charges.

This is not a new bank fee. It is federal government tax that banks and fintechs must collect and remit to the Nigerian Revenue Service, as required by Nigeria’s tax laws.

👉 The VAT is charged only on the service fee, not on the amount of money you send or receive.

Example:
If your bank charges ₦100 as a transfer fee, the VAT will be ₦7.50 (7.5% of ₦100).

This clarification has been confirmed in customer notices sent out by fintech platforms such as Moniepoint and reported by reputable Nigerian media.

Electronic Banking Services Affected by the 7.5% VAT

The 7.5% VAT on electronic banking services in Nigeria applies to service charges on the following:

✔ Mobile Banking Transfer Fees
Fees charged when you transfer money using banking apps or fintech platforms.

✔ USSD Transaction Charges
Charges for transfers made using USSD codes (such as *737#, *901#, and similar codes).

✔ Card Issuance and Processing Fees
Fees for ATM card issuance, replacement, or related services.

Banks and fintech companies are required to clearly display the VAT separately on transaction receipts and account statements for transparency.

What Is Exempt from VAT on Electronic Banking?

Not all banking-related income is affected. According to official explanations, the following remain VAT-exempt:

• ❌ Interest earned on savings accounts

• ❌ Interest on fixed deposits

• ❌ Other non-fee banking returns

This means you will not be taxed on the interest you earn from your bank savings or deposit accounts.

Why FG Introduced 7.5% VAT on Electronic Banking Services

The Federal Government says the policy is part of a broader effort to:

• Standardize VAT collection across digital financial platforms

• Improve transparency in the financial system

• Boost government revenue in line with Nigeria’s growing digital economy

While VAT on some banking services has existed before, the Nigerian Revenue Service is now enforcing uniform compliance across all banks and fintechs, ensuring that everyone follows the same rules.

Banks and Fintechs Begin Customer Notifications

Several banks and fintech companies have already started notifying customers via email and in-app messages.

In one such notice, Moniepoint stated that:
“We are required to collect and remit a 7.5 per cent VAT to the Nigerian Revenue Service. This is a statutory obligation mandated by the federal government.”

Other financial institutions are expected to issue similar notices as the implementation date approaches.

Simple Breakdown of the VAT Charge

Let’s make it very clear:

• Bank USSD transfer fee: ₦50
• 7.5% VAT on ₦50: ₦3.75
• Total charge: ₦53.75

You will see the VAT clearly itemized on your receipt.

Related Charges Customers Should Know About

In addition to the 7.5% VAT on electronic banking, customers should note that:

• A ₦50 stamp duty applies to electronic transfers of ₦10,000 and above

• This charge is a one-off fee per eligible transaction

• It was formally reclassified under Nigeria’s new Tax Act

This stamp duty is separate from VAT and still applies.

Key Things Every Nigerian Bank Customer Should Know

• ✔ The 7.5% VAT on electronic banking is federal government tax, not a bank-imposed fee
• ✔ It starts on January 19, 2026
✔ It applies only to service charges, not transferred amounts
✔ Interest on savings remains VAT-free
✔ VAT will be clearly shown on receipts

Verified Sources

This article is based on reports and official explanations from trusted and verifiable sources regarding the 7.5% VAT on electronic banking services in Nigeria:

• Nigerian Revenue Service (NRS):

The NRS has clarified that the 7.5% VAT applies to service fees on digital banking transactions and must be collected and remitted by banks and fintechs. This policy is part of broader VAT compliance measures in Nigeria’s digital economy.
Read more on NRS official website

• Federal Government policy communications:

The Federal Government has officially directed banks and fintechs to begin collecting VAT on certain electronic banking charges starting January 19, 2026.
FG directs banks, fintechs to remit 7.5% VAT — TheStar Nigeria
FG directs banks, fintechs to collect VAT — Vanguard Nigeria

• Reputable Nigerian media reporting:

Coverage from credible outlets provides detailed explanations of the VAT implementation and customer impact.
Exclusive: Who pays 7.5% VAT on mobile transfers — Legit.ng
Banks, fintechs to take VAT on mobile and USSD transfers — The Nation Online
NRS clarifies VAT application on bank charges — TVC News

• Customer notices issued by regulated fintech companies:

Fintech platforms such as Moniepoint and other banks have communicated the upcoming VAT collection on electronic banking services to their users.
Moniepoint, other Nigerian banks to charge 7.5% VAT — DailyPost Nigeria

Readers are encouraged to consult official government platforms such as the Nigerian Revenue Service website for the latest updates and authoritative explanations regarding VAT policies.

MikeTech Hub Commitment

At MikeTech Hub, we are committed to providing accurate, verified, and easy-to-understand information to help Nigerians understand government policies without fear, confusion, or misinformation.

✍️ By Michael Okolike
Digital Media Strategist | Published via MikeTech Blog

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