Starting January 19, 2026, Nigerian bank customers will face a 7.5% Value Added Tax on certain electronic banking services. This tax targets service fees for mobile transfers, not the amount you send.
Many Nigerians rely on mobile apps for quick transfers. The VAT adds a small charge to the bank's fee. For example, if your bank charges N100 for a transfer, you pay an extra N7.50 in VAT.
This policy comes from the Nigerian Revenue Service, formerly the Federal Inland Revenue Service. It aims to boost government revenue from digital banking growth.
What Does 7.5% VAT on USSD Transactions Mean?
USSD codes like *737# or *919# are popular for transactions without internet. From January 19, 2026, these will incur VAT on their service fees.
If a USSD session costs N20, the VAT is N1.50. Your total becomes N21.50. It's a minor addition, but it stacks up for frequent users.
Banks and fintechs like Moniepoint, OPay, and Kuda must collect and remit this tax. They act as collectors, passing the VAT to the government.
Key Differences: VAT vs. Stamp Duty on Transfers
Don't confuse this with the N50 stamp duty on transfers over N10,000. Stamp duty is flat on receipts, while VAT is percentage-based on fees.
For a N100,000 transfer with N50 fee, you pay N50 stamp duty, N50 fee, plus N3.75 VAT on the fee. Total extra: N103.75.
This layered charging raises concerns about affordability in Nigeria's cashless economy.
Exemptions from the 7.5% VAT on Banking Fees
Not all services face this tax. Interest on savings and deposits remains exempt. Microfinance banks with tier 1 or 2 licenses are also spared.
The tax skips the principal amount transferred. It only hits the service charge imposed by your provider.
Businesses can claim input VAT on these fees in their returns, easing the burden for companies.
How the 7.5% VAT Affects Daily Banking in Nigeria
Imagine sending N50,000 via app. Bank fee: N25. VAT: N1.88. Total deduction: N26.88, plus any stamp duty.
For frequent transfers, costs add up. Nigerians in rural areas using USSD might feel it most, as alternatives are limited.
Fintech growth has made banking accessible. This tax could slow adoption if fees rise too much.
Expert Insights on 7.5% VAT Implementation
Financial expert Gilbert Ayoola notes the VAT applies solely to fees, not principals. He stresses it's a standard tax on services.
The National Association of Telecoms Subscribers opposes it, calling it double taxation on USSD's N6.98 session fee. They may challenge it legally.
Government views it as aligning with global digital tax norms, supporting infrastructure funding.