FG Targets Revenue Expansion, Tax Compliance as 7.5% VAT Takes Effect on Mobile Transfers, USSD

The Federal Government has announced the implementation of a 7.5 per cent Value Added Tax (VAT) on selected electronic banking services, citing the need to strengthen tax compliance, broaden the revenue base and align Nigeria’s digital economy with existing tax laws.

The VAT, which takes effect from Monday, January 19, 2026, will apply to service charges on mobile bank transfers, Unstructured Supplementary Service Data (USSD) transactions and other eligible electronic banking services.

According to regulatory directives issued by tax authorities, financial institutions are now required to collect and remit the VAT on applicable electronic transaction fees to the Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS).

The policy is part of the Federal Government’s broader fiscal reform agenda aimed at improving non-oil revenue generation and ensuring that rapidly growing digital financial services contribute appropriately to national revenue.

Several banks and fintech companies have already begun notifying customers of the change. In a notice to its users, Moniepoint stated that the VAT deduction is not a new charge by financial institutions but a statutory tax obligation mandated by government.

“From Monday, 19 January 2026, we are required to collect a 7.5% VAT, to be remitted to the Nigerian Revenue Service,” the notice read.

Officials clarified that the VAT will be applied only to service fees charged by banks and fintechs, such as transfer or USSD usage fees, and not to the actual amount being transferred or customer deposits.

Analysts say the move reflects government efforts to close revenue leakages, improve transparency in the financial system and bring electronic banking services fully under the country’s tax net, especially as digital transactions continue to surge nationwide.

Members of the public have been advised to take note of the commencement date and factor the VAT into their planning for electronic banking transactions going forward.