- Nigerian banks and fintechs have started deducting 7.5% VAT on ATM card issuance and maintenance fees on federal government orders
- The Nigerian Revenue Service said the charge applies only to service fees, not to customers' account balances or savings
- The NRS confirmed this is not a new tax but an enforcement of existing VAT rules, with banks acting as collection agents for the government
Pascal Oparada is a journalist with Legit.ng , covering technology, energy, stocks, investment, and the economy for over a decade.
Nigerian bank customers will now see a clearer breakdown of charges on their ATM cards as banks and fintechs begin deducting 7.5 per cent Value Added Tax (VAT) on card issuance and maintenance fees.
The Nigerian Revenue Service (NRS) has clarified that the deduction is not a new tax on customers’ bank balances, but a standard enforcement of existing VAT regulations on banking service charges.
What the VAT applies to
According to the NRS, the 7.5 per cent VAT applies only to the actual service fee charged by banks and fintechs for ATM card issuance or monthly maintenance. It does not apply to the total amount held in a customer’s account.
For instance, if a bank charges N50 as a monthly card maintenance fee, the VAT will be calculated on that N50. At 7.5 per cent, the VAT amounts to N3.75, bringing the total deduction for the service to N53.75. This means customers are not being taxed on their savings, deposits, or account balance, but only on the specific banking service they use.
NRS says it is not a new tax
The clarification came after concerns from customers who noticed additional deductions linked to ATM card charges. Many feared the Federal Government had introduced another tax burden amid rising living costs.
However, the NRS stressed that VAT has always been applicable to taxable goods and services under Nigerian tax laws. The current directive is simply an enforcement measure to ensure banks and fintech companies comply with the existing VAT framework. The agency explained that financial institutions are acting as collection agents, deducting the VAT from applicable service fees and remitting it to the government.
How much customers may pay
The impact on customers will depend on the specific fee charged by their bank or fintech provider.
| Service Fee | VAT at 7.5% | Total Charge |
| N50 | N3.73 | N53.75 |
| N100 | N7.50 | N107.50 |
| N1,000 | N75.00 | N1,075.00 |
This shows that the VAT is proportionate to the service fee and not a flat charge on all account holders.
What it means for customers
For millions of Nigerians, the immediate effect will be a slight increase in the cost of obtaining or maintaining an ATM card. While the additional amount may appear small, it could add to concerns over rising banking charges and the broader cost of living.
Banks and fintechs are expected to display the VAT separately on transaction receipts or account statements, making it easier for customers to understand what portion of the deduction is the original service fee and what portion is tax. The NRS urged customers to note that the VAT deduction should only apply to eligible banking services.
With this clarification, Nigerians can expect more transparency in ATM card-related deductions, even as the 7.5 per cent VAT continues to apply to qualifying banking service fees.
