This includes mobile bank transfers and USSD transactions beginning from January 19, 2026, following a new regulatory directive backed by the Federal Government.

According to a notice that Moniepoint sent to its customers on Wednesday, January 14, 2026, informing users of the implementation of the VAT charges on some selected electronic banking transactions.

As revealed by the Bank, the directive was issued by the Nigerian government, mandating financial institutions to begin the collection and remittance of VAT.

“We would like to inform you of an upcoming government-endorsed regulatory change regarding Value Added Tax (VAT).

“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 Bank said that the tax would apply to “certain banking services”, including “electronic banking charges such as mobile banking fees (transfers), USSD transaction fees, and card issuance fees”.

The firm, however, clarified that not all banking transactions would attract the tax.

“Services that DO NOT attract VAT include: interest on deposits and savings,” the notice stated.

The Bank also distanced itself from responsibility for the new charges, saying the deductions were not a price increase by the company.

“This is not a price increase by Moniepoint. Moniepoint is required to collect and remit VAT to the Nigerian Revenue Service (NRS).

“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. VAT applies only to banking or service fees, not interest,” the statement added.

According to the Bank’s statement, VAT charges will appear separately on your transaction reports and statements.

The new VAT enforcement policy is projected to affect millions of users who rely daily on mobile banking platforms and USSD services for financial services.

Announced by Zacch Adedeji, FIRS executive chairman the exemption aims to ease financial pressure on citizens and promote economic inclusion.

The new tax framework, the most significant overhaul since Nigeria’s independence, also seeks to simplify the tax system, broaden the tax base, and support small businesses.

“With these new laws, food, education, transport, and agriculture will be VAT-free,” Adedeji declared. “The President has fulfilled his promise to make businesses flourish by removing all burdens and hurdles. This is the best thing that has happened to Nigeria’s fiscal ecosystem since 1960.”

Key Details of the Reform

• The reforms combine multiple tax statutes into a single consolidated tax code, scheduled to take effect in January.
• Businesses with annual turnover below ₦50 million will be exempt from certain taxes.
• Personal income tax thresholds are adjusted upward to protect low-income earners.
• FIRS will be renamed the Nigeria Revenue Service (NRS) to reflect its broader mandate across all levels of government, not just federal.

Implications & Context

According to Adedeji, the reforms are already showing results: Nigeria’s tax-to-GDP ratio has risen from 10% to 13.5% in two years, with a target of 18% by 2027.

States have reportedly used increased revenues to repay ₦1.85 trillion in debts, while debt servicing burdens have dropped.

Despite potential short-term discomfort, Adedeji likened the reform process to the “pain of a woman in labour,” stressing that current interventions are cushioning impacts.

He also noted that a petrol surcharge included in the new law will only be activated by ministerial order and officially published before it takes effect.

[Source: Punch Newspapers]

This marks the second consecutive month that FAAC disbursements have crossed the N2 trillion mark, according to The Nation newspaper report.

The revenue, shared at the August 2025 FAAC meeting in Abuja, was buoyed by increases in oil and gas royalty, value-added tax (VAT), and common external tariff (CET) levies, according to a communiqué issued at the end of the meeting.

Out of the N2.225 trillion total distributable revenue, FAAC said N1,478.593 trillion came from statutory revenue, N672.903 billion from VAT, N32.338 billion from the Electronic Money Transfer Levy (EMTL), and N41.284 billion from Exchange Difference.

The communiqué revealed that gross federation revenue for the month stood at N3.635 trillion. From this amount, N124.839 billion was deducted as cost of collection, while N1,285.845 trillion was set aside for transfers, interventions, refunds, and savings.

From the statutory revenue of N1.478 trillion, the Federal Government received N684.462 billion, State Governments received N347.168 billion, and Local Government Councils received N267.652 billion.

A further N179.311 billion (13 per cent of mineral revenue) went to oil-producing states as derivation revenue.

From the distributable VAT revenue of N672.903 billion, the Federal Government received N100.935 billion, the states received N336.452 billion, while the local governments got N235.516 billion.

Of the N32.338 billion shared from EMTL, the Federal Government received N4.851 billion, the States received N16.169 billion, and the Local Governments received N11.318 billion.

From the N41.284 billion exchange difference, the federal government received N19.799 billion, the states received N10.042 billion, and the local governments received N7.742 billion, while N3.701 billion (13 per cent of mineral revenue) was shared to the oil-producing states as derivation.

“For the first time, South Africa is no longer bound by the economic policies of a single party, forcing political leaders to negotiate better solutions,” says Stefan Kritzinger, head of Compliance and Support at Govchain. With Parliament yet to deliberate on the budget, Kritzinger urges bold decisions to steer economic growth, as government plans to extend the Covid-19 SRD grant, raise public sector wages by 5.5%, and manage rising debt, which hit 75.1% of GDP in September 2024. He advocates cutting unnecessary spending, implementing pro-business reforms like rail and port concessions, and conducting a comprehensive government spending review.

Nonetheless, businesses will need to start preparing for a likely VAT increase of 0.5%.

“VAT applies to multiple transactions for businesses, but absorbing the VAT increase through their purchases is only one side of the coin. Many companies still offer their own VAT rated goods or services. The increase in VAT creates a financial conundrum for business owners over whether to pass on that increase to the consumers by raising the price of their goods and services or alternatively absorbing the increase without raising the price and operate at a profit loss, with the hopes that this would increase sales over time,” Kritzinger described.

For many businesses teetering on the edge of financial distress, absorbing such a profit loss is just not a viable and sustainable option.

VAT must be paid over to SARS every two months by businesses, where many already struggle to set aside that amount when trying to cover their daily expenses.

Therefore, increasing prices of goods or services is an unfortunate reality to maintain VAT payments and avoid the consequences, which could also include SARS audits and investigations – something that can create reputational damage as well.

“Nonetheless, pricing strategies exist for scenarios such as VAT increases. Businesses can adopt a gradual pricing approach with some products or services being increased immediately while others are raised further on in the financial year. Alternatively, all products or services have their prices simultaneously increased gradually throughout the year. The result is nonetheless the same with reduced customer resistance and less price shock,” Kritzinger suggested.

Other methods can include offering customers more value with the price increase. These can come in the shape of loyalty programmes, bundle deals, or special discounts.

Whether businesses absorb the increase in VAT or pass it onto the consumer through price increases, there is still an opportunity for businesses to conduct an expenditure review with the objective of cutting redundant and wasteful operational costs. This would also empower businesses to relook at their suppliers and either renegotiate contracts or find new cost-effective ones.

“Tough times require tougher decisions, but with the right strategies in place, businesses have a chance to get through the rough fiscal waves that lie ahead,” Kritzinger concluded.

The governors, at the end of their meeting, endorsed the sharing of the VAT proceeds on the basis of 50 per cent equality, unchanged from what is currently in operation; 30 per cent derivation, from 20 per cent currently in operation and 60 per cent that was proposed by the Presidential Tax Reform Committee headed by Mr. Taiwo Oyedele.

The governors also agreed on 20 per cent sharing on population basis, from 30 per cent which is the current allocation before the tax reforms proposal.

The tax reforms deal came as Senate yesterday projected a N100 trillion aggregate expenditure for the 2026 fiscal year, and vowed to free funds it said were being held by some government organisations.

Senator Solomon Adeola, chairman, Senate Committee on Appropriation, made the disclosure during a Stakeholders Public Hearing and Interactive Session on the 2025 Appropriation Bill. The session had the theme, “The 2025 Budget of Restoration: Securing Peace, Rebuilding Prosperity.”

Senator Natasha Akpoti-Uduaghan, the chairman of the Senate Committee on Local Content, said some stakeholders in the north were jittery about the tax reform bills because the region was ill-prepared for such fiscal legislation.

At the same time, some northern groups urged Nigerians, particularly northerners, to be wary of political actors using the current tax reforms debate as platform to advance their ambitions ahead of the 2027 general election.

However, Academic Staff Union of Universities (ASUU) reiterated its stance against the proposed Nigeria Tax Bill 2024, warning that it would spell doom for public universities in the country if implemented.

The communique of the governors’ meeting with members of the Presidential Tax Reform Committee in Abuja, held behind closed-doors, was signed by Abdul Rahman Abdul Razaq, chairman of Nigeria Governors’ Forum (NGF) and Governor of Kwara State.

The communique stated, “The Forum endorsed a revised Value Added Tax (VAT) sharing formula to ensure equitable distribution of resources: 50 per cent based on equality, 30 per cent based on derivation, and 20 per cent based on population.

“The Forum reiterated its strong support for the comprehensive reform of Nigeria’s archaic tax laws. Members acknowledged the importance of modernising the tax system to enhance fiscal stability and align with global best practices.

“We, members of the Nigeria Governors’ Forum (NGF) and presidential tax reform committee, convened on the 16th of January 2025 to deliberate on critical national issues, including the reform of Nigeria’s fiscal policies and tax system, arrived at more resolutions.

“Members agreed that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time, to maintain economic stability.

“The Forum advocated for the continued exemption of essential goods and agricultural produce from VAT to safeguard the welfare of citizens and promote agricultural productivity.

“The meeting recommended that there should be no terminal clause for TETFUND, NASENI, and NITDA in the sharing of development levies in the bills

“The meeting supports the continuation of the legislative process at the National Assembly that will culminate in the eventual passage of the Tax Reforms Bills.”

Yesterday’s meeting between the governors and members of the presidential committee marked a major breakthrough, as the northern states’ governors, emirs and chiefs had last year rejected the proposed tax amendment bills sent to the National Assembly by the federal government.

They said it was capable of jeopardising the wellbeing of the people in the region.

The northern leaders said they were not against any policy that would ensure the growth and development of the country, but called for equity and farness in the implementation of all national policies and programmes to ensure that no geopolitical zone was marginalised.

Their position was contained in a communique signed by Chairman of Northern Governors’ Forum, Governor Muhammadu Yahaya of Gombe State, after a joint meeting with the traditional council in Kaduna.

The communique read, “Forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly.

“The contents blare against the interests of the north and other sub-nationals, especially the proposed amendment to the distribution of Value Added Tax (VAT) to Derivation-based Model.

“This is because companies remit VAT using location of their headquarters and tax office and not where the services and goods are consumed.

“In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and call on members of National Assembly to oppose any bill that can jeopardise the well-being of our people.

“For the avoidance of doubt, the Northern Governor’ Forum is not averse to any policies or programmes that will ensure the growth and development of the country.

“However, the Forum calls for equity and farness in the implementation of all national policies and programmes so as to ensure that no geopolitical zone is short-changed or marginalised.”

Fielding investors’ questions at a meeting on the sidelines of the on-going IMF/World bank Annual Meetings in Washington DC, he said that a bill before the National Assembly would bring about a situation where rich Nigerians would pay VAT rate that would increase over time to 15 percent.

He clarified, however, that the poor and vulnerable will pay less or zero VAT on essential goods.

According to him, the list of such essential goods that would attract zero VAT would be made available to the public in due course.

His words:

“In terms of VAT, the commitment of President Bola Tinubu is that while implementing difficult and wide-ranging but necessary reforms, the poorest and most vulnerable will be protected.

“And in the case of VAT, it is a very efficient tax for reasons well-known but it is also a tax that is targeted. So the bills going through the National Assembly in terms of VAT will raise VAT for the wealthy on luxury goods while at the same time seeking to exempt or seek a zero rate for the essentials and for what the poor and the average persons will purchase.

“Those bills will single items for zero rate of VAT while hitting luxuries with a higher rate of VAT.”

Edun was optimistic that the oil sector was set to increase the accretion of foreign exchange (FX) into the market, as according to him, oil production was being ramped up with better security in the oil-producing areas and new investments, especially those announced by Total and ExxonMobil.

He also said that total removal of fuel subsidy became effective in September 2024.

“Savings from fuel subsidy savings would become more impactful on the economy going forward, the complete fuel subsidy became effective only last month,” he stated. [Source: Vanguard]

In the executive bill seen by TheCable on Sunday, the National Assembly intends raising the VAT to 10 percent by 2025.

The legislature also intends to increase the VAT to 12.5 percent by 2026 through 2029, according to the document.

Recall that on May 8, 2024, chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, had said the VAT rate needs to be increased.

Meanwhile, the bill also proposes a reduction in the corporate income tax (CIT) to 27.5 percent by 2025 — down from 30 percent — and a further cut to 25 percent by 2026.

Companies with less than N20 million turnover are exempted from paying the CIT, according to the bill.

The document reads:

“VAT shall be charged on the value of all taxable supplies at the following rates (a) 2025 year of assessment 10 percent; (b) 2026, 2027 2028 and 2029 years of assessment 12.5 percent (c) 2030 year of assessment and thereafter 15 percent.

“Tax shall be levied, for each year of assessment in respect of total profits of every company, in the case of; (a) a small company, at zero percent; and (b) any other company, at the rate of-(i) 27.5 percent in 2025 year of assessment, and(ii) 25 percent from 2026 year of assessment.

“Notwithstanding any provision of this Act or any other enactment, where, in any year of assessment, the effective tax rate of a company is less than 15 per cent, such company shall recompute and pay an additional tax that makes its effective tax rate equal to 15 percent.

“The provisions of this section shall apply to (a) a company that is a constituent entity of an MNE group; and (b) any other company with an aggregate turnover of N20 billion and above in the relevant year of assessment.

“The companies covered under this section and the determination of the additional tax payable shall be in accordance with regulations issued by the Service.”

The data from the Federation Account Allocation Committee Disbursement reports, published by the National Bureau of Statistics (NBS) has revealed.

The deductions were said to have been made between 2019 and 2023 from the allocations given to state governments from the Federation Account.

The federation account is currently being managed under a legal framework that allows funds to be shared under three major components: statutory allocation, Value Added Tax (VAT) distribution, and derivation principle.

According to the analysis report, the deductions incurred by the sub-nationals were; N57bn in 2019, N74bn in 2020, before increasing to N86.2bn in 2021, N78bn in 2022, and N120.01bn as of December 2023. The figure indicated an increase of 110 percent, signaling the country’s huge debt amidst dwindling revenue.

However, it was observed that the most hit state by the deductions was Lagos, with about N131.1bn deducted for external debt servicing.

It was followed by Kaduna with N45.85bn deducted, and Cross River with N21.59bn deducted.

About N18.25bn, N14.76bn, N10.31bn, and N10.92bn were deducted from Oyo, Rivers, Ogun, and Edo respectively.

The least affected states were Borno (N1.55bn), Yobe (N2.1bn), and Zamfara (N2.1bn).

It was noted that the total amount deducted was mostly fixed throughout the year except for January and February.

Despite this heavy debt servicing, the federal government has not restrained from obtaining loans to service its expenditures.

For records, the Government borrowed a total sum of N4.94tn from domestic sources in the first six months of the administration of President Bola Tinubu, indicating significant dependence on loans.

Furthermore, the domestic debts rose by N4.94tn from N48.3tn recorded in June 2023 to N53.3tn as of December 31, 2023. Although external loans reduced by $664m in the six months ($43.2m in June and $42.4m in December), the figure increased by $901m when compared with $41.5m in September and $42.4m in December.

Also, Nigeria spent a sum of N7.8tn to service its debt obligations in 2023, a 121 percent increase compared to N3.52tn incurred in the previous year.

An analysis of the domestic debts showed that the government borrowed N2.29tn from the FGN bonds market with the figure increasing by 5.45 percent from N41.97tn recorded in June 2033 to N44.26tn as of December 31, 2023.

The government also borrowed N1.79tn from treasury bills, N8.47bn from savings bonds, N350bn in Sukuk loans, and N549.02bn from promissory notes.

Under external debt, increased borrowing was observed from the African Development Bank and the Exim Bank of China, with a total loan of $541.5m.

The increased debt is, however, contradictory to promises made by the Tinubu administration to reduce borrowing and focus more on increasing revenues.

[Featured Image Credit]

The total amount shared at FAAC is a slight increase compared to N906.9 billion shared in the previous month.

According to the communique issued at the end of the Committee meeting on Friday, from the stated amount inclusive of Gross Statutory Revenue, Value Added Tax (VAT), Electronic Money Transfer Levy (EMTL), and Exchange Difference, the Federal Government received N402.867 billion, the States received N351.697 billion, the Local Government Councils got N258.810 billion, while the Oil Producing States received N75.410 billion as Derivation, (13% of Mineral Revenue).

The meeting which was chaired by the Wale Edun, the minister of Finance and Co-ordinating Minister of the Economy, disbursed the sum of N60.960 billion as cost of collection, and N470.592 billion allocated for transfers intervention and refunds.

The gross revenue available from the Value Added Tax (VAT) for November 2023, was N360.455 billion, which was N13.112 billion increase from the N347.343 billion distributed in the preceding month.

From that amount, the sum of N14.418 billion was allocated for cost of collection and the sum of N10.381 billion given for transfers, intervention and refunds.

“The remaining sum of N335.656 billion was distributed to the three tiers of government of which the Federal Government got N50.348 billion, the States received N167.828 billion, Local Government Councils got N117.480 billion.

“Accordingly, the Gross Statutory Revenue of N882.561 billion received in the month was higher than the sum of N660.090 billion received in the previous month of October, 2023 by N222.470 billion.

From that amount, the sum of N46.044 billion was allocated for Cost of Collection and a total sum of N460.211 billion for Transfers, Intervention and Refunds.

The remaining balance of N376.306 billion was distributed as follows to the three tiers of government: Federal Government was allocated the sum of N174.908 billion, States got N88.716 billion, LGCs got N68.396 billion, and Oil Derivation (13% Mineral Revenue) got N44.286 billion.

“Also, the sum of N12.450 billion from Electronic Money Transfer Levy (EMTL) was distributed to the three (3) tiers of government as follows: the Federal Government received N1.793 billion, States got N5.976 billion, Local Government Councils received N4.183 billion, while N0.498 billion was allocated for Cost of Collection,” it stated.

The Communique disclosed that the exchange difference for the period was N364.869 billion.

Of this amount, the federal government received N175.817 billion, the states got N89.177 billion, the sum of N68.751 billion allocated to local government councils, and N31.124 billion given for derivation (13% of mineral revenue).

Also, the total revenue distributable for the current month of November 2023, was drawn from Statutory Revenue of N376.306 billion, Value Added Tax (VAT) of N335.656 billion, N11.952 billion from Electronic Money Transfer Levy (EMTL), and N364.869 billion from Exchange Difference, bringing the total distributable amount for the month to N1,088.783 trillion.

The balance in the Excess Crude Account (ECA) as at December 15, 2023 stands at $473,754.57.

In his remarks at the meeting Wale Edun, the Minister of Finance and Co-ordinating Minister of the Economy, said the Tinubu led administration was committed to achieve rapid and sustained economic growth in the country.

He added that the Gross Domestic Growth (GDP) per Capita in Nigeria was increasing and getting many people out of poverty.

This rise also coincides with a hike in the Value Added Tax (VAT) from 5% in 2020 to 7.5% in 2022.

This is according to the National Bureau of Statistics’ ‘Nigerian Gross Domestic Product Report (Expenditure and Income Approach),’

Net taxes on products, defined as the total taxes payable on products minus any subsidies received, amounted to N1.43 trillion in 2019.

In 2020, with the introduction of the new VAT regime, taxes increased by 34.97% to reach N1.93 trillion. This figure further rose by 32.13% to N2.55 trillion in 2021 and by 18.88% to N3.03 trillion in 2022.

The NBS commented on the growth of net taxes on products, stating that on a year-on-year basis, there was a real-term growth of 10.30% in Q3 of 2022 and 11.18% in Q4 of 2022, compared to 6.22% and 67.99% in Q3 and Q4 of 2021, respectively.

On an annual basis, net taxes on products grew by 14.19% in 2022, which was lower than the growth rate of 25.81% recorded in 2021. In nominal terms, the growth rate of net taxes on products was 24.95% in Q3 of 2022 and 23.71% in Q4 of 2022.

The slower growth in taxes in 2022 can be attributed to rising inflation and challenging economic conditions that impact purchasing power in the country. The NBS noted that growth rates turned negative in Q2 to Q4 of 2022 due to increasing prices and difficult economic conditions.

Specifically, the growth rates were -5.83% in the third quarter and -12.47% in the fourth quarter of 2022, indicating lower rates compared to the corresponding quarters of 2021.

Since the implementation of the 7.5% VAT rate in February 2020, VAT revenues have increased by 108.33% from N1.2 trillion in 2019 to N2.5 trillion in 2022. Despite the rise in VAT revenues, there is a new call for further increasing the country’s VAT rate.

Former Minister of Finance, Zainab Ahmed, suggested raising the VAT rate from 7.5% to 10%, stating that Nigeria currently has the lowest VAT rate in the world.

Ahmed emphasized the importance of VAT in revenue generation and mentioned that tax compliance has increased.

The adjustment from 5% to 7.5% was made to boost revenue, although the original target was 10%. The aim is to reach 10% in the second year to further enhance revenue