Banks to deduct 7.5 percent VAT on POS and mobile transfer fees

Banks will begin deducting a 7.5 percent value added tax on banking service charges, including point of sale transaction fees and mobile banking transfer fees, from January 19. Customers were informed of the change through notices issued by financial institutions.

In an email to customers, Moniepoint Microfinance Bank said the charge follows a government endorsed regulatory directive. The bank clarified that the VAT is applied to service charges such as the 50 naira stamp duty and does not affect the actual amount being transferred or withdrawn.

Moniepoint said the VAT will be remitted to the Nigerian Revenue Service, formerly known as the Federal Inland Revenue Service. It added that the tax applies to electronic banking charges, including POS transaction fees, mobile and USSD transfer fees, POS activation fees, card issuance fees, Moniebook subscriptions, as well as loan processing and documentation fees.

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The bank noted that services not subject to VAT include interest on loans, advances, deposits and savings. It stressed that the charge is not a price increase by the bank and that VAT will be listed separately on transaction statements, in line with the current VAT rate of 7.5 percent.