Your next USSD transfer could cost a little extra – starting Monday, banks and Fintech's are adding a 7.5 % VAT on every service fee.
.jpeg) |
| Photo credit: google |
This follows a directive from the Federal Government with orders to banks and Fintech's to start collecting 7.5 % VAT on electronic banking services, From January 19, 2026.
You would realized an email was sent to you from either of the Fintech banks you use.
This is intandem with President Tinubu's Tax reform bill, 2026.
The government is putting a 7.5 % tax on mobile money, USSD and card fees.
But don’t panic – Here’s a simple guide to what’s changing and how it affects your daily transactions;
The 7.5 % VAT is a consumption tax the government is adding to certain electronic‑banking services.
1. What’s taxed?: Only the service fee you pay for things like mobile‑money transfers, USSD transactions, and card‑issuance charges. The money you’re actually moving (the principal amount) stays untaxed.
2. How it’s calculated: If a bank charges you N100 as a transfer fee, the VAT is 7.5 % of that N100 → 0.075 × 100 = N7.50. You’ll pay the N100 fee + the N7.50 tax.
3. Who collects it?: Your bank or fintech (e.g., Moniepoint, OPAY) adds the tax to the bill, then sends the collected amount to the Nigerian Revenue Service (NRS).
4. What stays tax‑free: Interest earned on deposits, savings, or any other returns on your account is not subject to this VAT.
For Example:
You have N10,000 in a savings account. At the end of the month, the bank pays you N200 as interest. No VAT is charged on that N200. You keep the full N200 as your earnings.
However, if you use a service like transferring money via USSD and the bank charges you a N50 service fee, the 7.5% VAT will apply to that N50 fee (making it N53.75 total). The interest on your deposit remains untouched by the VAT.
In short, it’s a 7.5 % tax on the price of the banking service itself, not on the money you’re transferring or saving.
DEFINITION OF TERMS:
1. What's FINTECH BANKS: Fintech means Financial Technology. it’s the use of tech (apps, internet, software, etc.) to make financial services faster, cheaper, and more convenient.
Examples of FINTECH Banks includes, Moniepoint, Opay, PalmPay, etc.
2. What is VAT?
Value-added Tax.
In banking, VAT is a tax added to certain banking service fees, not to the money you deposit or the interest you earn.
3. USSD: means Unstructured Supplementary Service Data. It’s a way to communicate with your bank or service provider using just your phone’s dialer e.g. *919#. (no internet needed).
Written by Pololis Danladi Dung
.jpeg&description=BANKS/FINTECH: HOW THE 7.5% VAT ON ELECTRONIC BANKING SERVICES ORDERED BY FG WORKS ){kind=link}
0 Comments