What The 7.5% VAT On Transaction Fees Really Means
Value Added Tax (VAT) is a government-mandated tax charged at 7.5% on eligible service fees in Nigeria. All banks are required to apply and remit this tax.
Note: VAT is completely different from stamp duty.
VAT applies to service fees, while stamp duty applies to eligible deposits and transfers as defined by regulation.
VAT is charged only on applicable service fees, not on transaction amounts.
Each account gets 25 free transfers. After the free transfers are used up:
- A ₦10 transfer fee applies
- 7.5% VAT is charged on the ₦10 fee only, not on the transfer amount
- A card issuance and delivery fee applies where applicable
- 7.5% VAT is charged on the card issuance and delivery fee only.
- A service fee applies to investment funding and withdrawals, where applicable
- 7.5% VAT is charged on the 100 Naira service fee only, not on the investment amount
VAT is not charged when:
- You are still within your 25 free transfers
- You are making Paytali-to-Paytali transfers
VAT is calculated only on the transfer fee, not on the money being sent.
- The VAT charge is not set by Paytali
- It is a regulatory requirement
- VAT collected is remitted to the government
- VAT applies only after free transfers are exhausted
- VAT is charged on the ₦10 transfer fee, not the transaction amount
- Paytali-to-Paytali transfers are always free
- VAT and stamp duty are separate and unrelated charges
Frequently Asked Questions (FAQ)
VAT is charged only on the transfer fee (after free transfers are exhausted), not on the amount sent.
Yes. VAT is applied to service fees across all banks in Nigeria, in line with government regulations.
The VAT rate may change if the Federal Government announces a new tax policy.
No. VAT does not apply to interest earned on savings accounts or investments.
No. Business accounts follow the same VAT rules. If a service fee applies, VAT will also be charged.