Nigeria’s Federal Government has ordered all commercial banks and fintech operators to collect and remit a 7.5 per cent value-added tax (VAT) on certain electronic banking services, effective January 19, 2026, industry sources said on Thursday.
The directive, communicated via emails to customers from payment platforms such as Moniepoint, is part of the government’s broader effort to standardise VAT collection in the country’s rapidly growing digital financial sector and to expand domestic revenue.
According to the notice, the 7.5 per cent VAT will apply to service fees associated with electronic banking, including mobile money transfers, USSD transaction charges, and card issuance fees. The tax is calculated on the service fee alone, not on the funds being transferred.
For example, a N100 mobile transfer fee will incur a N7.50 VAT charge. Services such as interest earned on deposits and savings accounts remain exempt, ensuring that customers do not pay tax on returns from their bank accounts.
“From Monday, January 19, 2026, we are required to collect a 7.5 per cent VAT, to be remitted to the Nigerian Revenue Service (NRS),” Moniepoint said in its customer communication. “This is a statutory requirement and not a price increase.”
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Other financial service providers are expected to issue similar notices in the coming days, according to banking industry sources.
Standardising VAT on digital financial services
The Nigerian Revenue Service, formerly known as the Federal Inland Revenue Service, has set deadlines for compliance, directing all commercial banks, microfinance banks, and electronic money operators to ensure proper collection and remittance.
VAT on banking transactions is not entirely new, but the NRS is now enforcing uniform collection rules across all platforms. The move aims to ensure transparency, improve compliance, and streamline revenue generation in a sector that has seen rapid digital adoption in recent years.
Customers will see the VAT clearly itemised on transaction statements and reports, allowing transparency in fees charged.
The directive follows earlier reforms under the revised Tax Act, which reclassified the electronic money transfer levy (EMTL) as stamp duty. Since December 2025, banks have been deducting N50 stamp duty on electronic transfers of N10,000 and above. The levy now applies as a one-off charge on qualifying transactions.
Government rationale and economic context
Officials say the measure is intended to expand Nigeria’s tax base as digital financial services play an increasingly prominent role in the economy. By capturing VAT on service fees, the government aims to standardise tax collection across all operators while maintaining customer protection.
Nigeria’s digital economy has grown rapidly over the past decade, with millions of transactions now conducted daily via mobile banking, fintech platforms, and online payment systems. Regulators argue that formalising VAT collection ensures that revenue from this expanding sector contributes to public finances, while encouraging consistency and fairness among service providers.
“The NRS has emphasised that the 7.5 per cent VAT applies only to certain service fees, not the principal funds being transferred or earned as interest,” said an industry source. “This clarification aims to reassure customers that the tax is limited in scope and is intended for regulatory compliance, not to increase costs arbitrarily.”
Implementation and compliance
Banks and fintechs are expected to integrate the new VAT rules into their systems ahead of the January 19 start date, ensuring that charges are automatically calculated and remitted. Compliance will be monitored closely by the NRS, with penalties for operators failing to meet obligations.
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Analysts say the move reflects a broader trend across African economies to expand digital taxation frameworks, improve revenue mobilisation, and formalise sectors that have historically operated with fragmented oversight.
For consumers, the government has assured that the tax will be transparent, clearly itemised, and limited to service fees, while keeping everyday banking affordable.
The directive is likely to affect millions of Nigerians who rely on mobile money transfers and electronic payments, particularly small businesses, merchants, and individuals increasingly using digital channels for financial transactions.
