Banks And Fintechs To Begin Deducting 7.5% VAT On Cash Transfers And USSD Transactions From Monday

According to Ireporter Online, the Federal Government has directed all commercial banks, microfinance institutions, and fintech platforms to start collecting and remitting a 7.5 per cent Value-Added Tax (VAT) on selected electronic banking service fees, effective Monday, January 19, 2026.

The VAT will be applied to service charges associated with electronic transactions, rather than the principal amounts being transferred. The Nigerian Revenue Service (NRS), formerly the Federal Inland Revenue Service, stated that the move is aimed at standardising tax collection within Nigeria’s rapidly expanding digital economy.

Financial institutions are instructed to deduct VAT solely from the service fees. For instance, a transfer fee of ₦100 will now incur an additional ₦7.50 as VAT. In a customer notice, fintech firm Moniepoint confirmed the directive and outlined its impact on users.

“From Monday, January 19, 2026, we are required to collect a 7.5 per cent VAT, to be remitted to the Nigerian Revenue Service,” the firm stated. Moniepoint added that the tax will cover electronic banking services including mobile banking transfers, USSD transaction fees, and card issuance charges. Interest earned on savings and deposit accounts will remain exempt.

The NRS has further instructed financial institutions to ensure transparency by clearly itemising VAT on transaction receipts and account statements, allowing customers to easily monitor the deductions.

This implementation follows the new Tax Act, under which banks recently reinstated the ₦50 stamp duty on electronic transfers of ₦10,000 and above. While VAT on banking services is not new, authorities are now requiring consistent compliance across fintech platforms and traditional banks to close revenue gaps.

As the January 19 rollout approaches, customers can expect notifications from their banks and fintech providers explaining how the VAT will be applied to electronic banking transactions.