The Federal Government has issued a new directive to all financial institutions, including commercial banks and fintech giants such as Moniepoint and OPay, to begin collecting a 7.5% Value Added Tax (VAT) on electronic transfer fees and USSD charges. The new tax regime, which was communicated to customers through various bank notices on Wednesday, January 14, 2026, is set to take effect on Monday, January 19, 2026, officially.
This development follows the passage of the Nigeria Tax Act 2025 and the rebranding of the Federal Inland Revenue Service (FIRS) to the Nigerian Revenue Service (NRS). According to regulatory notices, the VAT will not be charged on the principal amount being transferred but will instead apply to the service fees charged by the banks. For instance, if a bank charges ₦25 for a mobile transfer, an additional 7.5% VAT (approximately ₦1.88) will now be added to that fee, bringing the total service cost to ₦26.88.
The timing of this implementation has sparked widespread concern, coming just weeks after the January 1, 2026, reclassification of the Electronic Money Transfer Levy (EMTL) into a ₦50 Stamp Duty, which is now deducted from the sender’s account for transactions of ₦10,000 and above.
As Nigeria pushes for a “cashless” economy, the introduction of multiple tax layers on digital services presents a complex challenge for both the government and the average citizen.
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The government reasons that as the digital economy expands, it must capture revenue from the billions of transactions occurring via mobile apps and USSD. However, a counterpoint raised by the National Association of Telecom Subscribers (NATCOMS) is that this move risks “double taxation.” Since Nigerians already pay VAT on the airtime used to access USSD services, adding VAT to the USSD session fee itself creates a repetitive tax burden on the same transaction.
There is an underlying assumption that ₦1.88 or ₦0.52 is too small to matter. In truth, for the millions of “zero-dose” and low-income Nigerians who rely on micro-transactions, these cumulative costs can become a deterrent. To test this reasoning, if a small trader makes 20 transfers a day, the annual “micro-tax” burden becomes significant, potentially driving them back to cash, the very thing the Central Bank of Nigeria (CBN) is trying to discourage.
From the perspective of the NRS, this is not a “new” tax but an enforcement of existing laws that many fintechs previously absorbed or ignored during their growth phase. By mandating a uniform January 19 deadline, the government is leveling the playing field between traditional banks and newer digital-only platforms.
The truth is that Nigeria’s non-oil revenue must grow to service the country’s ₦15 trillion debt. However, prioritizing fiscal targets over user experience in the digital sector could slow the momentum of financial inclusion. As Moniepoint noted in their FAQ, this is a “government-endorsed regulatory change” and not a company price hike, yet the consumer will feel the impact regardless of who is to blame.
