Value Added Tax (VAT)
VAT is a 7.5% consumption tax charged on most goods and services in Nigeria. Businesses with annual turnover above ₦25 million must register with FIRS, charge VAT on sales, and file returns monthly by the 21st of the following month.
Worked example
You invoice a client ₦1,000,000 for taxable services. You add 7.5% VAT of ₦75,000, so the invoice total is ₦1,075,000. You collect the ₦75,000 on behalf of FIRS and remit it, less any input VAT you paid on business purchases that month.
What is exempt
Basic food items, medical supplies, educational materials and exported goods are VAT-exempt. If you sell a mix of exempt and taxable items, your invoice must show the split.
If you are not registered
Businesses below the ₦25 million threshold must not charge or show VAT on invoices. Charging VAT without being registered is a compliance problem, not a shortcut.
See also input VAT and output VAT.
More Nigerian tax terms
- Company Income Tax (CIT)
- Consolidated Relief Allowance (CRA)
- Development Levy
- Direct assessment
- FIRS (Federal Inland Revenue Service)
- Input VAT
- Minimum wage tax exemption
- Output VAT
- PAYE (Pay-As-You-Earn)
- Personal Income Tax (PIT)
- Rent relief
- Tax Clearance Certificate (TCC)
- Tax Identification Number (TIN)
- Withholding Tax (WHT)
Tax that works itself out
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