The Federal Government of Nigeria has mandated that all **banks, microfinance institutions, and fintech platforms must begin collecting and remitting a 7.5% Value Added Tax (VAT) on selected electronic banking service fees starting Monday, January 19, 2026. This directive aims to close revenue gaps, standardise tax collection in the digital financial services sector and capture more value from Nigeria’s rapidly growing cashless economy.

Under the new rule, VAT will apply only to service fees charged on electronic transactions — such as mobile bank transfer fees, USSD (Unstructured Supplementary Service Data) charges and card issuance fees — rather than to the actual amounts being transferred. For instance, if a bank charges ₦100 for a transfer, the 7.5% VAT will be applied only on that ₦100 charge, adding ₦7.50 to the service cost.

What Transactions Will Attract the VAT?

According to notices sent to customers by fintech firms like Moniepoint, the VAT will be applicable to a range of electronic banking service charges, including:

• Mobile banking transfer fees
• USSD transaction fees
• Card issuance and related service fees

This tax does not apply to interest earned on deposits or savings, which remain exempt, ensuring that customers are not taxed on their returns from accounts or savings.

Banks and fintechs have started notifying customers ahead of the implementation date to ensure smooth compliance with the new requirement. Notices emphasise that this is not a price increase by the institutions, but rather they are statutorily obliged to collect and remit the tax to the Nigerian Revenue Service (NRS), which was formerly the Federal Inland Revenue Service.

How It Will Be Collected

Under the government directive:

• Financial institutions will deduct the 7.5% VAT at the point of service — directly from the service charge.
• The VAT component will be shown separately on transaction receipts and account statements for transparency.
• The collected tax will be remitted to the Nigerian Revenue Service as required by law.

Why This Change Matters

This policy forms part of a broader effort by the Federal Government to expand Nigeria’s tax base and standardise VAT collection across digital financial services. As more Nigerians rely on mobile and digital banking for everyday transactions — driven by the rapid adoption of fintech and mobile money platforms — the move seeks to modernise revenue collection in line with the growing digital economy.

While the VAT increase is relatively modest, it reflects a shift toward formalising the taxation of digital financial services and ensuring government gets a share of revenue generated by these widespread everyday transactions.

Customer Impact

For everyday users of mobile banking and USSD services, this change means slightly higher transaction costs on service fees. However, because the VAT is charged only on the service fee and not the amount transferred, many Nigerians may only see a marginal increase in the total cost of electronic transactions.