A fresh wave of frustration is sweeping across Nigeria as reports emerge that citizens will soon pay an additional 7.5% Value Added Tax (VAT) on fees associated with mobile bank transfers and Unstructured Supplementary Service Data (USSD) transactions.
The new charge, set to take effect from January 19, 2026, targets the electronic banking fees that millions rely on for everyday financial activities.
The policy stems from ongoing implementation of Nigeria’s tax reforms under the Nigeria Tax Act 2025, which took broader effect from January 1, 2026.
While the standard VAT rate on goods and services remains unchanged at 7.5%, the application now extends explicitly to certain banking service charges.
This includes fees for mobile banking transfers, USSD sessions used for quick codes like *737# or *901#, as well as related electronic banking costs such as POS transaction fees or card issuance in some cases.
Banks have begun notifying customers via email and app alerts, explaining that the VAT will be added to these service fees before remittance to the relevant tax authorities.
The move arrives amid a cashless economy push that has seen digital transfers surge in recent years, especially among urban dwellers, small businesses, and those in remote areas dependent on USSD for basic banking without smartphones or data.
For many Nigerians already grappling with existing bank charges, transfer fees, and stamp duties on larger amounts, this additional layer represents yet another cost burden on routine transactions.
A typical small USSD transfer or app-based send, even if the base fee is modest, will now carry the 7.5% VAT on top, potentially discouraging frequent use of formal channels for low-value movements of money.
Public reaction has been swift and largely critical.
On social media platforms, users have voiced anger over what they describe as piling pressure on ordinary people, with some pointing out that earlier promises of tax reforms aimed at protecting lower-income groups appear undermined by these incremental deductions.
Comments range from sarcastic references to the broader tax environment to outright calls for reconsideration, highlighting how digital inclusion efforts could backfire if costs keep rising.
The government and tax authorities have framed recent reforms as necessary to boost non-oil revenue, streamline collection, and fund national development.
Broader changes in 2026 have included shifts like moving stamp duty responsibilities for certain electronic transfers to senders and exemptions for smaller transactions or specific categories.
However, the precise application of VAT to banking fees has caught many by surprise, fueling debates about transparency and the cumulative impact on citizens’ wallets.
As January 19 approaches, banks continue to clarify the scope through customer communications, while everyday Nigerians brace for the change in their next transaction.
Whether this leads to reduced digital activity, higher informal cash use, or renewed pressure for policy adjustments remains to be seen in the days ahead.
Follow the Parallel Facts channel on WhatsApp: https://whatsapp.com/channel/0029VaCQSAoHgZWiDjR3Kn2E
