08/05/2026
Value Added Tax (VAT)
Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production and distribution. In Nigeria, VAT is administered by the Nigeria Revenue Service (NRS) and applies to most goods and services supplied in the country, as well as to imports.
The standard VAT rate is 7.5%. Certain goods and services are zero-rated or exempt, such as basic food items, medical and pharmaceutical products, and educational materials.
Eligibility to File
All businesses above the exemption threshold that supply taxable goods and services in Nigeria are required to register for VAT, charge VAT and render a return on or before the 21st day of the month following transaction with the NRS. This includes companies, partnerships, sole proprietors, and non-resident suppliers providing digital or physical goods/services to Nigerian customers.
Exemption from VAT Filing & Payment
Small companies are exempted from filing and paying VAT
VAT Invoice
(1) A taxable person who makes a taxable supply shall maintain a sequential invoice numbering, and shall in respect of a supply, furnish the purchaser with a VAT invoice containing, the following –
supplier's tax ID;
an invoice number;
name and address of the supplier;
supplier's incorporation or business registration number as applicable;
the date of supply;
name of purchaser or client;
gross amount of transaction; and
VAT charged and the rate.
(2) VAT invoice shall be issued on supply whether or not payment is made at the time of supply
Fiscalisation of supplies for VAT
A taxable person making a taxable supply shall implement the fiscalisation system deployed by the Service in accordance with Nigeria Tax Administration Act, 2025.
Taxable supply by non-residents
A non-resident person who makes taxable supplies to Nigeria shall register for tax and include VAT on its invoice for all taxable supplies.
Where a non-resident person is making taxable supplies from outside Nigeria to persons in Nigeria, the taxable person to whom the supply is made in Nigeria shall withhold the VAT due on the supply and remit it to the Service
Computation of VAT payable or refundable
Calculate output VAT (VAT collected on sales) and input VAT (VAT paid on purchases).
Deduct input VAT from output VAT to determine VAT payable or refundable.
File VAT returns and make payment online via the NRS portal or at designated banks.
Retain all supporting invoices and records for audit purposes.
Required Documents
VAT invoices for all sales and purchases
Monthly VAT return form (VAT 002)
Proof of payment (if paid via bank)
Tax Identification Number (Tax ID)
Zero-Rated and Exempt Goods/Services
Some goods and services are zero-rated (taxed at 0%) or exempt from VAT. Examples include:
Basic food items (e.g., rice, beans, yam, bread)
Medical and pharmaceutical products
Educational materials and services
Exported goods and services
Input VAT Recovery
Registered businesses can recover input VAT paid on purchases and expenses related to their taxable supplies. Ensure all input VAT claims are supported by valid VAT invoices.
Input VAT on capital expenditure and services is now fully recoverable under the new regime.
Input VAT on exempt supplies cannot be claimed.
Deadlines and Penalties
VAT returns must be filed monthly, not later than the 21st day of the month following the month of transaction. Failure to register, file, or pay VAT on time attracts penalties and interest. Common penalties include:
₦100,000 for the first month of default, ₦50,000 for each subsequent month (for late registration or filing).
Interest on unpaid VAT at the prevailing rate.
Additional penalties for false declarations or non-remittance
Check Deadlines
Disputes
If you disagree with a VAT assessment or penalty, you may file an objection with the NRS within 30 days of receiving the notice. Further appeals can be made to the Tax Appeal Tribunal.
For complex issues, consult your Accountant/ Tax professional
