There is widespread concern among banks’ customers over charges imposed by deposit money banks amidst the implementation of the new tax law.
While the Nigerian Revenue Service (NRS) had assured that nothing has changed with the financial services, there have been rising complaints over what some banks’ customers called hidden charges.
Some Nigerians who spoke with one of our correspondents said banks have commenced deductions on savings and business accounts, with customers reporting reduced payouts and uncertainty over how the charges are applied.
From January 1, 2026, financial institutions began enforcing a 10 per cent withholding tax on interest earned from savings and investment accounts, in line with the Nigeria Tax Act and the Withholding (Deduction at Source) Regulations, 2024.
While banks and fintech platforms describe the deductions as statutory, many customers say they were caught off guard by the sudden changes.
For Tobiloba Adewale, the deductions became evident during a routine withdrawal from a locked savings account with a fintech bank.
“I was surprised to see that a substantial amount of money was deducted from my savings account,” Adewale said.
According to him, he regularly locks away funds he does not need immediately, withdraws the accrued interest and applies it to personal expenses.
However, during a withdrawal last week, he noticed his payout was 10 per cent lower than usual.
“I went back to trace the transaction and saw that I was debited 10 per cent for withholding tax. This felt unacceptable as I had already made plans for the money, and the government just dipped their hands into my money,” he added.
Similar concerns are emerging among business owners who operate corporate accounts and rely heavily on electronic transfers.
Stephen Oladokun, an importer who sells household items online, said uncertainty around the new deductions has made it difficult to plan his finances.
“I don’t really understand how this tax works, and that’s my major concern,” Oladokun said, adding, “I have a feeling that at some point, financial institutions may be instructed to start deducting a percentage from money paid into business accounts.”
Oladokun noted that blanket deductions on inflows could significantly affect profit margins, especially for small and medium-sized businesses.
“If I sell something for N200,000, my actual profit might only be N25,000 or N35,000. If 7.5 or 10 per cent is deducted from the full amount, it could wipe out the profit entirely,” he said.
He added that he is considering passing additional charges to customers to cushion the impact, though he fears it could drive them to competitors.
“Customers might end up leaving us, but I don’t want to be on the losing end after working so hard,” Oladokun said.
While withholding tax on interest is not new in Nigeria, its enforcement across all savings accounts, including fintech-based offerings, marks a shift from previous years when deductions were uneven or poorly understood.
Other bank customers interviewed said they only became aware of the policy after noticing reduced interest payouts or unexpected deductions on their statements.
Some also expressed concern that multiple charges ranging from transfer fees to statutory taxes are gradually eroding the benefits of keeping money in the banking system.
Daily Trust reports that the federal government had commenced implementation of Value Added Tax of 7.5 per cent on selected banking services, including mobile bank transfers and USSD transactions, from January 19, 2026.
A notice sent to customers by a fintech said this followed a new government-backed regulatory directive.
According to the notice, the development is tied to a directive from tax authorities mandating financial institutions to begin VAT collection and remittance.
“We would like to inform you of an upcoming government-endorsed regulatory change regarding Value Added Tax (VAT),” the notice stated.
It added, “From Monday, 19 January 2026, we are required to collect a 7.5% VAT, to be remitted to the Nigerian Revenue Service (NRS) (formerly known as the Federal Inland Revenue Service).”
The company disclosed that the tax will apply to “certain banking services,” including “electronic banking charges such as mobile banking fees (transfers), USSD transaction fees and card issuance fee.”
However, Moniepoint clarified that not all banking-related transactions would attract the tax, noting that “services that DO NOT attract VAT include: interest on deposits and savings.”
The firm also distanced itself from responsibility for the new charges, stressing that “this is not a price increase by Moniepoint.”
“Moniepoint is required to collect and remit VAT to the Nigerian Revenue Service (NRS),” the notice read.
It further explained that the tax authority had issued a clear timeline for compliance across the financial sector.
“The NRS has communicated a deadline for 19th January 2026 for all financial institutions (commercial banks, microfinance banks and electronic money transfer operators) to start collecting and remitting VAT,” the statement said.
However, the NRS immediately clarified that the imposition of Value-Added Tax (VAT) on banking services, including electronic money transfer, fees and commission is only applicable to charges already collected by banks.
In a statement, NRS said VAT has always applied to banking services and is not newly introduced under the Nigeria Tax Act.
The statement signed by Dare Adekanmbi, Special Adviser on Media to the NRS chairman, Zacch Adedeji, explained that “The Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard.”
“The Nigeria Revenue Service (NRS) wishes to address and correct misleading narratives circulating in sections of the media suggesting that Value Added Tax (VAT) has been newly introduced on banking services, fees, commissions, or electronic money transfers. This claim is categorically incorrect.
“VAT has always applied to fees, commissions, and charges for services rendered by banks and other financial institutions under Nigeria’s long-established VAT regime. The Nigeria Tax Act did not introduce VAT on banking charges, nor did it impose any new tax obligation on customers in this regard.
“The Nigeria Revenue Service urges members of the public and all stakeholders to disregard misinformation and to rely exclusively on official communications for accurate, authoritative, and up-to-date tax information,” the statement said.
The statement also included a list of Frequently Asked Questions (FAQs) on VAT as it relates to the tax law in order to provide further clarity on other areas of concern to Nigerians.
In the FAQs, it explained that VAT is charged on banking services where a fee or commission is charged for a service.
“VAT applies to commissions, fees, and charges for services rendered by banks and other financial institutions, such as transfer fees, USSD charges, card issuance fees, account maintenance fees, and similar service charges. This has always been the position under Nigerian VAT law, and was not introduced by the Nigeria Tax Act,” it said.
It also explained that VAT is not charged on the amount of money transferred or withdrawn, adding, “It applies only to the service charge or commission imposed by the bank. For example, if a bank charges N10 for a transfer, VAT of 7.5% (N0.75) applies to that N10 charge—not to the amount being transferred.”
It added, “Interest earned on savings accounts, fixed deposits, and similar deposit accounts is not subject to VAT. Interest income is not a supply of goods or services and therefore does not attract VAT under the Nigeria Tax Act, 2025.”
More customers express concern over charges
Speaking to Daily Trust, a bank customer, Hafiz Aliyu expressed displeasure over what he called three layers of ‘ridiculous’ charges on his account
“Honestly, it is hilarious, let me put it mildly, because I am yet to come to terms with the charges coming my way whenever I am using any of my apps. But the most disturbing, honestly, is the one from one of the new generation banks, probably maybe because I use it more often compared to other banks.
“If I buy a recharge card, for instance, for 2,000 in the morning, immediately after I pay for it, you see some charges, you understand, two different charges, two different text messages accompanying the purchase of the recharge card. Secondly, let’s say I transfer N20,000 to a friend or a brother, immediately after the transfer, I will see two additional text messages. One is NIP charge which is N25.
“So what I’m really saying is, for every transaction, whether you buy a recharge card, whether you transfer money or whatever, you see one or two deductions.
“Then at night, this is the most serious aspect of it, at night, between 9 and 10pm, I will see a deduction of 100 Naira or 200 and then 50 Naira. Every night I witness this and I have it on my phone every night. Every night, after every transaction, they charge me money. I don’t know what that deduction is for.
“And then on the 30th or 31st of every month, you now see huge deductions depending on the level of transaction. Sometimes I can see a deduction of N30,000. Yes, I have it on my phone at the end of the month.
He further stated that “The three layers of transaction from the bank include N25 NIP transfer levy for every transaction whether funds transfer or bill payment, N100 to N200 at night then between N21,000 to N30,000 as account maintenance fee and another N1,500 as VAT on account maintenance. It is just ridiculous,” he said.
‘Why customer may incur over N100 on each transfer’
Daily Trust reports that for an inter-bank transfer below N100,000, the account holder is charged N25 as Nigerian Inter-bank Payment (NIP) fees.
Daily Trust gathered that the charge approved by the Central Bank of Nigeria (CBN) is typically tiered: around N10 for under N5000, N25 for N5000 to N50,000 and N50 for over N50,000 plus a recent 7.5% VAT on these service fees, making them slightly higher (e.g., N26.88 for a N25 fee.)
Then, the newly introduced N50 stamp duty is charged per transaction. The stamp duty replaced the previous electronic money transfer levy (EMTL) charged on destination accounts receiving N10,000 and above.
This implies that a customer is charged N50 extra stamp duty on each transfer of N10,000 and above. Some banks deduct this N50 at the end of each day with a clear tag, Stamp Duty.
Economist gives insight
Head of financial institutions ratings at Agusto & Co, Ayokunle Olubunmi, in a chat with our correspondent said the only charge that might look strange is the new VAT introduced on the bank charges.
He advised banks’ customers to reach out to their banks if they have noticed any strange charge, saying they can even write to the CBN for proper investigation.
“The N50 e-transfer levy that the receiver typically pays, it is the sender that would now bear that particular charge. And then number two, all those charges we typically get now, if you transfer funds, if for instance the bank charge is N150, there would be VAT on that particular charge. Those are the two new charges.
“However, maybe there are some other charges that banks introduced; we don’t know. Personally, I have not experienced something like that. Customers experiencing any strange charge should reach out to the bank and if you are not satisfied, you can write to the CBN to complain about it. You can write to the Consumer Protection Council to complain about it,” he said.
Financial analyst, Dr. Marcel Okeke said, “The first thing that is going to happen is that the implementation of the tax laws would work against a cashless economy. It is also going to work against financial inclusion. Those two things that the Central Bank has pursued over the years, this is Nigeria, once the people begin to experience all kinds of charges, they would start insisting on cash.
“If you have gone to the market, the market women and traders are insisting on cash transactions. The market women selling tomatoes, selling crayfish, selling yam, they insist on cash and what that means is that we are going back to that era when people keep their money under their bed, under their pillow rather than running through the banks.
“Even if you say you are not taxing them through PAYE, that small money they deduct, many people are not happy about it and they do everything humanly possible to stop it and evade and that is what is taking place even as the tax laws are still unfolding,” he said.
SOURCE: dailytrust.com