Taiwo Oyedele Explains: Who Actually Pays the 7.5% VAT on Transfers?
In recent days, I have observed a growing concern regarding the 7.5% Value Added Tax (VAT) appearing on bank transaction notifications. As the Chairman of the Tax Reform Committee, I want to clarify the legislative intent and the practical application of this charge.
The first rule of the 2026 Reform is transparency. You are not being taxed for sending money; you are being taxed for the service of moving that money.
The 'Principal vs. Fee' Distinction
If you send ₦50,000 to a relative, that ₦50,000 is your capital. The government does not take a percentage of that transfer. However, the bank provides a digital infrastructure to facilitate that move and charges a fee (e.g., ₦25 or ₦50). The 7.5% VAT applies only to that fee.
The Math Breakdown:
- Transfer Amount: ₦50,000
- Bank Fee: ₦50.00
- VAT (7.5% of ₦50): ₦3.75
- Total Cost to You: ₦50,053.75
Why is this happening now?
Under the previous fragmented system, VAT enforcement on micro-services was inconsistent. The 2026 Reform mandates a harmonized digital collection system. This ensures that every naira of tax due to the federation is captured at the point of service, reducing the need for aggressive physical audits on small businesses.
Does this affect USSD?
Yes. Every digital endpoint—be it a mobile app, a web portal, or a USSD string—is a service point. The goal is to create a level playing field where the 'convenience' is taxed fairly across all demographics.
"Our objective is simple: to make tax collection invisible, efficient, and fair. When you see a ₦3.75 VAT charge, you are seeing a system that is finally working for the collective good of the nation." — Taiwo Oyedele