Nigerian bank customers are set to face increased costs on digital transactions as a new 7.5 per cent Value Added Tax (VAT) on selected services, including mobile transfers and USSD banking, will take effect from Monday, January 19, 2026. The move, backed by a government regulatory directive, has sparked immediate backlash from consumer groups who label it a form of double taxation.
Financial Institutions Begin Compliance Notifications
Leading fintech operator, Moniepoint, was among the first to notify its customers of the impending change. In a communication sent out, the firm clarified that the directive came directly from tax authorities, mandating all financial institutions to begin the collection and remittance of VAT on specific services.
The notice explicitly stated that the VAT will apply to electronic banking charges such as:
- Mobile banking transfer fees
- Unstructured Supplementary Service Data (USSD) transaction fees
- Card issuance fees
Moniepoint was quick to distance itself from the decision, emphasising that "this is not a price increase by Moniepoint" but a regulatory requirement. The company confirmed it is legally obligated to collect and remit the VAT to the Nigerian Revenue Service (NRS), formerly known as the Federal Inland Revenue Service (FIRS).
The firm also provided crucial clarifications on the scope of the tax. It confirmed that VAT applies only to banking or service fees, not to the principal amount transferred or to interest earned on deposits and savings. Customers will see the new charge itemised separately on their transaction reports and statements.
NATCOMS Kicks, Threatens Court Action Over 'Cruel' Tax
The announcement has been met with fierce opposition from the National Association of Telecom Subscribers of Nigeria (NATCOMS). The association's President, Chief Deolu Ogunbanjo, described the new VAT as "cruel" and an instance of multiple taxation.
"Already, consumers are paying ₦6.98 per session on USSD, now we are going to be charged an extra 7.5 per cent," Ogunbanjo stated. He argued that the additional levy would place a significant burden on millions of Nigerians who rely on these affordable digital channels for daily financial activities.
Ogunbanjo issued a strong warning to the Federal Government, demanding an immediate review of the policy. "We are saying no to the planned 7.5 per cent VAT. They should review the entire process, if not we shall go to court," he declared, highlighting the group's readiness for a legal battle.
Sector-Wide Implementation and Broader Impact
According to the information released, the NRS has set a deadline of January 19, 2026, for universal compliance across the financial sector. This directive applies to all commercial banks, microfinance banks, and electronic money transfer operators.
The enforcement is expected to have a widespread impact, affecting a vast majority of the population that uses mobile banking apps and USSD codes for transactions. This move comes at a time when the government is seeking to widen its tax net and increase revenue, but it risks increasing the cost of financial inclusion for the average Nigerian.
Other financial institutions are anticipated to follow Moniepoint's lead and issue similar advisories to their customer bases in the coming days. The development sets the stage for a major public and legal debate on taxation policy and its impact on digital finance in Nigeria.
