VAT on Bank Charges Not New – NRS

By Oluwakemi Kindness

The Nigeria Revenue Service (NRS) says Value-Added Tax (VAT) on bank charges is not a new policy and was not introduced by the Nigeria Tax Act.

In a statement issued on Thursday, the Service describes claims of a fresh VAT burden on banking transactions as inaccurate.

It clarifies that VAT has long applied to fees, commissions and charges for services provided by banks and other financial institutions under Nigeria’s existing VAT framework.

According to the NRS, VAT is charged only on service-related fees, including transfer fees, USSD charges, ATM and card issuance fees, account maintenance fees and other bank service charges.

The Service stressed that VAT does not apply to the actual amount transferred or withdrawn, savings account interest, or fixed deposit interest.

The NRS further explained that the Nigeria Tax Act did not introduce VAT on electronic money transfers, bank fees or commissions, and did not impose new tax obligations on bank customers.

It says recent public concern followed renewed compliance and enforcement efforts, with banks reminded of their responsibility to remit VAT already charged and collected.

The clarification was issued in a statement signed by Dare Adekanmbi, Special Adviser on Media to the Nigeria Revenue Service, who advised the public to rely on official communications for accurate tax information.