What is VAT?
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.
When VAT Applies
VAT is charged only on applicable service fees, not on transaction amounts.
Transfers
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
Card Issuance and Delivery
A card issuance and delivery fee applies where applicable
7.5% VAT is charged on the card issuance and delivery fee only.
Investment Funding and Withdrawal
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
When VAT Does NOT Apply
VAT is not charged when:
You are still within your 25 free transfers
You are making Kuda-to-Kuda transfers
How VAT Is Calculated
Item | Amount |
Transfer | ₦1,000.00 |
Transfer Fee | ₦10.00 |
VAT (7.5% of ₦10) | ₦0.75 |
Total Charge | ₦1,010.75 |
VAT is calculated only on the transfer fee, not on the money being sent.
Why You’re Seeing This Charge
The VAT charge is not set by Kuda
It is a regulatory requirement
VAT collected is remitted to the government
Key Takeaways
VAT applies only after free transfers are exhausted
VAT is charged on the ₦10 transfer fee, not the transaction amount
Kuda-to-Kuda transfers are always free
VAT and stamp duty are separate and unrelated charges
Frequently Asked Questions (FAQ)
1. Is VAT charged on the amount of money I transfer?
VAT is charged only on the transfer fee (after free transfers are exhausted), not on the amount sent.
2. Is VAT applied to transfer fees on banking apps like Kuda?
Yes. VAT is applied to service fees across all banks in Nigeria, in line with government regulations.
3. Will the VAT rate change in the future?
The VAT rate may change if the Federal Government announces a new tax policy.
4. Does VAT apply to interest on my savings?
No. VAT does not apply to interest earned on savings accounts or investments.
5. Are business accounts treated differently?
No. Business accounts follow the same VAT rules. If a service fee applies, VAT will also be charged.