Recent headlines suggesting that Nigerians are paying 7.5% VAT on bank transfers have caused unnecessary confusion. This clarification is to set the record straight.
Key Fact:
You are NOT paying 7.5% VAT on the money you transfer.
The VAT applies only to the bank or USSD service fee, not to the transfer amount itself.
What This Means in Simple Terms
Whenever you use:
• Mobile banking apps
• USSD codes such as *737#, *894#, and others
Banks charge a small service fee for processing the transaction. The 7.5% VAT is added only to that service fee, not to your money.
Clear Examples
Example 1: App Transfer
• Amount sent: ₦10,000
• Transfer fee: ₦10
• VAT (7.5% of ₦10): ₦0.75
• Total charge: ₦10.75
Not ₦750. Not 7.5% of ₦10,000.
Example 2: USSD Transfer
• Amount sent: ₦5,000
• USSD fee: ₦6.98
• VAT (7.5%): ≈ ₦0.52
• Total charge: ≈ ₦7.50
Example 3: Large Transfer
• Amount sent: ₦200,000
• Transfer fee: ₦50
• VAT (7.5%): ₦3.75
• Total charge: ₦53.75
What You Are NOT Being Charged For
• VAT is not deducted from your transfer amount
• You are not losing 7.5% of your money
• The recipient receives the full amount sent
Why the Confusion?
Headlines are often simplified to grab attention. Saying “7.5% VAT on transfers” makes it sound like the government is taxing your money directly—which is not the case.
The VAT applies strictly to the service provided by banks, not to your funds.
