As tax disputes continue to swirl—and with Nigerians already paying a 7.5 percent Value Added Tax (VAT) on goods and services—the federal government is extending the levy to everyday banking, introducing an additional 7.5 percent VAT on selected services, such as mobile transfers and USSD transactions, effective January 19, 2026.
The move effectively expands the VAT regime deeper into everyday financial activity, placing extra costs on millions who rely on low-cost digital banking to navigate an economy battered by inflation, fuel price hikes and stagnant wages. While VAT is not new in Nigeria, critics note that this latest enforcement represents another layer of taxation, this time on routine banking transactions that have become essential for daily survival.
The new charge comes as Nigerians contend with rising food prices, escalating transport costs and multiple levies across essential services, intensifying what many describe as an unrelenting squeeze on disposable income. For low-income earners, artisans, and small traders—many of whom heavily depend on USSD and mobile banking due to limited access to smartphones or reliable internet—the policy raises the cost of basic economic participation.
A customer notice issued Wednesday afternoon by digital bank Moniepoint confirmed the impending implementation of the VAT regime on certain electronic banking charges.
“We would like to inform you of an upcoming government-endorsed regulatory change regarding Value Added Tax (VAT),” the notice stated.
“From Monday, 19 January 2026, we are required to collect a 7.5% VAT, to be remitted to the Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service.”
According to the notice, the tax will apply to “certain banking services,” including mobile banking fees for transfers, USSD transaction fees and card issuance fees.
However, Moniepoint clarified that not all banking-related transactions would attract the tax, noting that interest on deposits and savings remains VAT-exempt.
The company was careful to distance itself from responsibility for the additional deductions, stressing that the charge does not represent a price increase by the platform.
“This is not a price increase by Moniepoint,” the notice read. “We are required to collect and remit VAT to the Nigerian Revenue Service.”
Moniepoint added that the directive applies across the financial sector, including commercial banks, microfinance banks and electronic money transfer operators, all of which are expected to comply from January 19, 2026.
The firm further emphasised that the VAT would apply only to service charges, not to interest, and assured customers that deductions would be transparently displayed.
“VAT charges will appear separately on your transaction reports and statements,” the notice said.
The expanded VAT enforcement is expected to affect millions of Nigerians who depend daily on mobile banking platforms and USSD services to send money, pay bills and conduct small-scale business.
Critics argue the policy highlights a widening disconnect between fiscal policy and social reality. While the government frames the measure as a revenue-boosting initiative, many citizens view it as yet another burden shifted onto the most financially vulnerable—deepening concerns that Nigeria’s economic reforms are being funded from the bottom up, even as calls grow louder for visible cuts to government waste and elite spending.
