Expert Explains New 7.5% VAT on Mobile, USSD Bank Transfers From January 19 and Those Most Affected
- From January 19, 2026, Nigerian bank customers will pay a 7.5% VAT on service fees for mobile and USSD transfers
- This is in addition to the existing N50 stamp duty on transfers of N10,000 and above
- An expert has shared insight on the new bank charges and what it means for digital banking in Nigeria
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Financial expert Gilbert Ayoola has explained why Nigerian bank customers will begin paying a 7.5% Value Added Tax (VAT) on mobile banking transfers, USSD transactions, and other electronic banking services from January 19, 2026.
The new charges is alongside the existing N50 stamp duty on electronic transfers of N10,000 and above.
Source: Getty Images
Ayoola explained that the VAT applies only to service fees charged by banks, not the principal amounts transferred.
He noted that the move also ensures stricter compliance with federal tax regulations and aligns with the government’s drive to increase revenue.
Banks are passing statutory taxes directly to customers rather than absorbing costs.
He noted:
"Banks’ implementation of VAT on digital transactions reflects stricter compliance with federal tax regulations and increased alignment with the government’s revenue mobilisation drive.
"As digital banking has become the dominant channel for payments and transfers, regulators are tightening enforcement to ensure that taxable services within the financial sector are fully captured."
How the charges will work?
Ayoola explained that under the new regime, VAT will be calculated on transaction fees imposed by banks for providing mobile and USSD banking services. The principal amount transferred will remain exempt.
Alongside this, the statutory N50 stamp duty will continue to apply on electronic transfers of N10,000 and above.
He said:
"The combined effect is that customers will now face layered charges: bank transaction fees, 7.5% VAT on those fees, and stamp duty where applicable."
Source: Getty Images
Impact on Customers and Small Businesses
He explained further that low- and middle-income earners, small businesses, and informal traders who rely heavily on USSD banking due to limited smartphone or internet access are expected to feel the impact most.
Ayoola, who is the Ibadan Zone Shareholders' Association chairman, added:
"Frequent small-value transfers could cumulatively become more expensive, prompting some users to consolidate transfers, reduce transaction frequency, or explore alternative payment channels."
He warned that while this may increase the cost of digital banking, it could also encourage banks and fintechs to innovate, offering lower-cost channels or bundled services to retain customers.
Ayoola continues:
"From a macroeconomic perspective, the move broadens the tax base and strengthens non-oil revenue, a key priority for fiscal sustainability.
" As electronic payments dominate Nigeria’s financial ecosystem, taxing digital banking services reflects a modernisation of the tax framework in line with economic realities."
Wike’s man shares ‘how much tax was deducted’ after transfer
Legit.ng earlier reported that Lere Olayinka, an aide to the Federal Capital Territory (FCT) Minister Nyesom Wike has shared his experience of deductions from a routine transfer.
Olayinka revealed in a post that after he transferred N80,000, N53.75 was deducted.
The deductions follow changes under the Nigeria Tax Act 2025, which replaced the former Electronic Money Transfer Levy (EMTL) with a stamp duty charge.
Source: Legit.ng
