New 7.5% VAT on Digital Banking: Nigerian Man Explains What Customers Should Know
- A Nigerian man explained how the newly introduced 7.5% VAT affects mobile transfers, USSD, and POS transactions
- He clarified that the VAT was added to service fees, not deducted from the total transaction amount
- The explanation sparked online discussions as Nigerians reacted to higher digital banking charges
A Nigerian man has taken to social media to explain the newly introduced 7.5% Value Added Tax (VAT) charges on digital banking services in the country.
In a video shared on TikTok by @semudaraabayomi, the man broke down how the new charges affect services such as mobile bank transfers, USSD transactions and Point of Sale (POS) payments.
Source: Getty Images
His explanation came after a popular fintech company informed its customers about the new VAT deductions.
The new tax regime, which takes effect from January 2026, is expected to affect millions of Nigerians who rely heavily on mobile banking platforms and USSD codes for daily financial transactions, especially those without access to smartphones or internet banking.
How new VAT would affect digital banking
According to the FinTech company, financial institutions are now required to collect and remit a 7.5 per cent VAT on specific banking services to the Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS).
Commenting on this report, the Nigerian man stated that the 7.5 per cent would not be taken from the total amount sent during a transaction. Instead, it is added to the service fee already charged by the bank or fintech company.
In his words:
"You've made your POS transaction, they've deducted their own fee. On top of their own fee, they would have to add a 7.5% VAT on top of that."
Source: TikTok
He explained that when someone makes a POS transaction, the company first deducts its normal service fee. After that, an extra 7.5% VAT is added to that service fee. This means customers now pay more than before for the same transaction.
Details of how new VAT is applied
The same thing applies to mobile bank transfers and USSD transactions. Once the bank deducts its usual transfer fee, it then adds an extra 7.5 per cent VAT on top of that amount.
For example, if a bank charges N50 as a transfer fee, the VAT charges of N3.75 (7.5 per cent of N50) is then added to the transaction, making it N53.75 in total.
The man stressed that the VAT is collected because it is required by law and goes to the government, not the bank or fintech company.
Services that will not attract VAT include interest on loans and advances.
He expressed concern about the growing number of charges Nigerians face while using digital banking services, describing the situation as frustrating for everyday users.
With the new VAT charges, users may now notice slightly higher fees each time they send money or make payments.
The explanation has sparked conversations online, with many Nigerians sharing their views on the impact of the new charges on small businesses and regular bank customers.
"This still means we would pay more in charges," Akinwunmi Olarenwaju said in the comments section.
Watch the video below:
Banks to debit customers N50 on Stamp Duty
Legit.ng earlier reported that banks in Nigeria would begin charging senders a N50 stamp duty on electronic transfers of N10,000 and above, following the implementation of the updated Tax Act starting January 1, 2026.
The levy, also referred to as the Electronic Money Transfer Levy (EMTL), is a one-off charge applied to electronic receipt or transfer of funds deposited in any commercial bank or financial institution.
Proofreading by Funmilayo Aremu, copy editor at Legit.ng.
Source: Legit.ng
