Clarification Emerges on New 7.5% VAT Applied to Bank Transfers, USSD Transactions

Clarification Emerges on New 7.5% VAT Applied to Bank Transfers, USSD Transactions

Amid growing public concern over reports of a new 7.5 per cent Value Added Tax (VAT) on bank transfers, financial experts have clarified that Nigerians are not being taxed on the actual amount of money transferred through mobile banking apps or USSD platforms.

ALSO READ: Morocco Eliminates Nigeria from AFCON After 4-2 Penalty Shootout Victory

The VAT, which takes effect on mobile and USSD transactions, is applied only to the service charge imposed by banks, not to the funds being sent.

According to the clarification, when customers carry out transactions using mobile banking applications or USSD codes such as *737# or *894#, banks charge a small transaction fee. The 7.5 per cent VAT is calculated solely on this fee, resulting in minimal additional charges measured in kobo rather than naira.

For instance, a ₦10,000 transfer that attracts a ₦10 service charge will incur a VAT of just ₦0.75, bringing the total charge to ₦10.75. Similarly, a ₦5,000 USSD transfer with a ₦6.98 fee will attract approximately ₦0.52 VAT, totaling about ₦7.50. Even larger transactions, such as a ₦200,000 transfer with a ₦50 fee, will only attract ₦3.75 VAT, making the total charge ₦53.75.

Importantly, the clarification emphasizes that:

• VAT is not deducted from the transfer amount
• Customers are not losing 7.5 per cent of their money
• Recipients receive the full amount sent

Observers say the confusion arose from headlines that suggested a blanket tax on transfers, creating unnecessary alarm. In reality, the VAT applies only to bank service charges, in line with existing tax regulations on financial services.

In summary, Nigerians are paying only a small VAT on transaction fees—not a tax on their transferred funds.

Clarification Emerges on New 7.5% VAT Applied to Bank Transfers, USSD Transactions