Value Added Tax (VAT)

Value Added Tax (VAT) is a consumption tax charged on the supply of taxable goods and services in Nigeria. The current VAT rate is 7.5% (increased from 5% effective February 2020). VAT is administered by the Federal Inland Revenue Service (FIRS). Under the NTA 2025, the fundamental VAT framework remains at 7.5%, with clarifications on exempt and zero-rated items.

All businesses and companies engaged in the supply of taxable goods or services in Nigeria must register for VAT with the FIRS. There is currently no VAT registration threshold in Nigeria — even small businesses must register. Non-resident companies making taxable supplies in Nigeria must also register or appoint a VAT agent.

The following are exempt from VAT (no tax applies, and input VAT cannot be recovered): • Basic food items: Rice, beans, yam, cassava, fruits, vegetables, and unprocessed agricultural products • Medical and pharmaceutical products • Educational materials: Books, newspapers, magazines, educational equipment • Baby products and sanitary items • Agricultural equipment and chemicals • Exports (zero-rated — no output VAT, but input VAT is recoverable) • Plant, machinery, and equipment purchased for use in the Export Processing Zone

VAT liability = Output VAT − Input VAT • Output VAT: 7.5% charged on your taxable sales • Input VAT: 7.5% you paid on business purchases If Output VAT > Input VAT → you remit the difference to FIRS If Input VAT > Output VAT → the excess is carried forward or refunded

VAT returns must be filed monthly, by the 21st day of the following month. For example, January VAT is due by 21 February. Appointed VAT agents (banks, government agencies, oil companies) must deduct and remit VAT directly when making payments to vendors. Electronic filing is via the FIRS TaxProMax portal.

• Non-registration: ₦10,000 for each month of non-compliance • Late filing: 5% of the tax due plus interest at the prevailing CBN rate • Failure to collect VAT: 150% of the uncollected amount • Late remittance: 5% per annum above the CBN rediscount rate