RESIDENTS of Asaba are expressing frustration as the federal government’s directive to impose a 7.5 percent Value Added Tax (VAT) on selected banking services took effect, yesterday.
The policy, which applies to charges for mobile transfers, USSD transactions, POS fees, and card issuance, is part of broader tax reforms aimed at enhancing revenue collection through the Nigeria Revenue Service (NRS). Fintech operator, Moniepoint, revealed in an email to customers that citizens would be required to remit a 7.5 percent VAT to the NRS, formerly known as the Federal Inland Revenue Service.
While officials insist it is not a new tax but a clarification of existing obligations, many locals see it as an added burden in a society now reliant on digital transactions for commerce and daily commuting.
The directive, communicated via emails and notices from banks and fintechs like Moniepoint, requires institutions to collect the VAT on service fees, not the transaction amounts themselves, and remit it to the NRS. For instance, a typical N50 bank transfer fee would now incur an additional N3.75 in VAT. The NRS maintains this aligns with long-standing VAT regulations under the Nigeria Tax Act, dismissing claims of novelty as misleading. In interviews conducted around Asaba, various correspondents shared their perspectives while expressing broader national sentiments of frustration and concern. Mr. Chinedu Ikeme, a trader at Ogbeogonogo Market, described the VAT as “double taxation” that could erode small business margins.
“We’re already paying fees for every transfer to suppliers in Onitsha. Adding VAT on top feels like the government is punishing us for using banks instead of cash,” he said.
“This thing could backfire in the end because I know people who have already started to avoid digital banking altogether, leading to more cash in hand and less tracking. It’s hard to blame them, but in this country where security is already a major concern, that’s a very big risk.”
Mrs. Amaka, a mobile money agent near the Stephen Keshi Stadium, criticized the policy’s timing amid rising living costs.
“The government wants to use different types of tax to finish the citizens. We haven’t finished talking about inflation and fuel prices. How can we survive if every small transfer eats more money than you care to give away? I think the government should be more considerate,” she lamented.
The NRS has reiterated that the VAT applies only to service charges, not principal amounts, and is remitted directly to the government, not retained by banks.
However, with social media abuzz and associations like the Agents Association of Nigeria voicing opposition, the policy’s rollout highlights ongoing tensions between fiscal reforms and public affordability.
The National President of the Agents Association of Nigeria, Sarafadeen Atanda Fasasi, has strongly opposed the implementation of the VAT on bank transfers and USSD transactions, describing it as double taxation and warning it could undermine Nigeria’s financial inclusion objectives.
