“THE REALITY:
The 7.5% VAT is NOT charged on the money you are sending (the principal). It is charged ONLY on the SERVICE FEE your bank or fintech (Moniepoint, OPay, Kuda, etc.) charges you”.
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“THE BIG MISCONCEPTION:
Many people think that if they send ₦100,000, the government will take 7.5% of that amount (which would be ₦7,500).
THIS IS 100% FALSE”
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If you’ve seen the news that a 7.5% VAT on mobile transfers and USSD transactions starts on January 19th, you might be worried that the government is about to “eat” your money.
The headlines are scaring people, but the math shouldn’t. A lot of people are misinterpreting this directive. Let’s break it down simply so you can see the actual impact.
1. The Big Misconception
Many people think that if they send ₦100,000, the government will take 7.5% of that amount (which would be ₦7,500).
THIS IS 100% FALSE.
2. The Reality
The 7.5% VAT is NOT charged on the money you are sending (the principal). It is charged ONLY on the SERVICE FEE your bank or fintech (Moniepoint, OPay, Kuda, etc.) charges you.
3. Let’s Look At The Math
If you send ₦100,000 today:
• The Principal: ₦100,000 (Your money)
• The Bank Fee: ₦50.00 (What the bank charges for the service)
• The 7.5% VAT: ₦3.75 (This is the charge, 7.5% of the ₦50 fee)
• EMTL (Stamp Duty): ₦50.00 (The standard flat levy)
• TOTAL COST TO YOU: ₦100,103.75
4. What about USSD?
If you use a code like *737# or *919# and the session fee is ₦20:
• The 7.5% VAT on that fee is ₦1.50.
• Your total cost becomes ₦21.50.
It is a kobo-difference, not a life-changing amount.
5. Why Is This Happening?
The Nigeria Revenue Service (NRS) is simply ensuring that all digital services are fiscalized. Just like you pay VAT on a bottle of drink or a data plan, you are now paying VAT on the service of digital banking.
The Bottom Line:
Your savings are safe. Your capital isn’t being slashed. This is a tax on the bank’s commission, not your hard-earned wealth.
Don’t let misinformation cause unnecessary stress. There is a huge difference between a Tax on your Money and a Tax on a Service Fee.
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