If you’ve seen headlines about a 7.5% VAT on bank transfers in Nigeria, you’re probably asking: Is the government taxing my money now? The short answer is no.
Many people are misreading the update on VAT on mobile transfers, VAT on USSD transactions, and digital banking charges. This article breaks it down simply so you understand what is actually taxed, what is not, and why your money is safe.
The Big Misconception About VAT on Bank Transfers
Most Read: How to Pay Zero Tax in Nigeria 2026
The biggest fear right now is that when you send money, the government removes 7.5% of the amount you transferred.
That belief is wrong.
The 7.5% VAT on bank transfers in Nigeria is not charged on the money you send. It does not apply to your ₦50,000 or ₦100,000 transfer. Your principal remains untouched.
What Is Actually Being Taxed?
Here’s the truth most headlines skip:
The VAT on mobile transfers applies only to the service fee charged by your bank or fintech platform, not your money.
Banks and fintechs (OPay, Kuda, Moniepoint, PalmPay, etc.) charge a small fee for processing transfers. VAT is applied only to that fee, just like VAT on airtime or data.
This is why panic around VAT on USSD transactions is unnecessary.
Simple Breakdown: How the Math Works
Let’s use a real example so it’s crystal clear.
If you transfer ₦100,000:
Amount sent (principal): ₦100,000
Bank service fee: ₦50
7.5% VAT on service fee: ₦3.75
EMTL (stamp duty): ₦50
Total cost: ₦100,103.75
That’s it. The VAT is ₦3.75, not ₦7,500.
This is why understanding the 7.5% VAT on bank transfers in Nigeria matters misinformation creates unnecessary fear.
What About VAT on USSD Transactions?
If you use USSD codes like *737# or *919#, the same principle applies.
Example:
USSD session fee: ₦20
7.5% VAT: ₦1.50
Total cost: ₦21.50
That’s a few kobo not a financial disaster. The VAT on USSD transactions is a tax on the service, not your balance.
Related Post: Bank Transfer Narration and Tax in Nigeria: Why “Gift” Won’t Save You
Why Is the Government Doing This?
This isn’t a new tax on your wealth. It’s part of Nigeria’s push to properly track and tax digital services.
Just like you pay VAT on:
Data subscriptions
Cable TV
Bank charges
You now pay VAT on digital banking services. The Nigeria Revenue Service is simply applying existing VAT rules consistently.
The Bottom Line (What You Should Remember)
Your money is not being taxed
Your savings are safe
VAT applies only to bank and fintech service fees
There’s a big difference between taxing your money and taxing a service
Once you understand this, the noise around the 7.5% VAT on bank transfers in Nigeria disappears.
Final Word
Don’t let viral headlines scare you. The real issue isn’t higher taxes it’s a poor explanation. Once you separate principal from service fees, everything makes sense.
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Frequently Asked Questions About 7.5% VAT on Bank Transfers in Nigeria
Is there a 7.5% VAT on bank transfers in Nigeria?
Yes, but not on the money you send. The 7.5% VAT applies only to the bank or fintech service fee, not to the transfer amount itself.
Is VAT deducted from the money I transfer?
No. VAT is not deducted from your principal. If you transfer ₦100,000, the ₦100,000 remains intact. VAT is charged only on the transaction fee charged by the bank or fintech.
How much VAT do I actually pay on a bank transfer?
VAT is 7.5% of the service fee, not the transfer amount.
For example, if the bank charges ₦50 as a transfer fee, VAT is ₦3.75.
Does VAT apply to mobile banking apps like OPay, Kuda, and Moniepoint?
Yes. The VAT applies to the service fees charged by fintech platforms, including OPay, Kuda, Moniepoint, PalmPay, and similar apps. It does not apply to your wallet balance or transferred funds.
Is there VAT on USSD transactions in Nigeria?
Yes. VAT on USSD transactions applies only to the USSD session fee, not the money transferred.
For example, if a USSD session costs ₦20, VAT is ₦1.50.
Is the government taxing my savings or capital?
No. The government is not taxing savings, capital, or transferred funds. This VAT applies strictly to digital banking services, similar to VAT on airtime or data subscriptions.
Why is the government charging VAT on bank transfers?
The Nigeria Revenue Service is ensuring that digital financial services are properly taxed. This aligns banking services with existing VAT rules already applied to other digital services.
Is this a new tax?
No. VAT has existed in Nigeria for years. What is changing is better enforcement on digital service providers, not the creation of a new tax on individuals.
Will this increase my cost of daily transactions significantly?
No. The increase is usually a few naira or kobo, depending on the service fee. It is not a percentage of the money you send.
Should I stop using bank transfers because of VAT?
No. Bank transfers remain one of the most cost-effective and secure payment methods. The VAT impact is minimal and unavoidable across digital services.
Who should seek professional tax advice on this?
You should seek professional guidance if you:
Run a business with high transaction volumes
Need clarity on VAT compliance
Want to structure transactions correctly
Manage fintech, POS, or agency banking operations
Is consultation free?
No. Professional tax consultations are paid, structured, and designed to help you avoid costly mistakes.
Does location matter for tax advisory services?
No. Distance is not a barrier. Advisory services can be provided remotely anywhere in Nigeria.
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