Understanding VAT for Your Business in Nigeria: VAT in Nigeria 2024

 If your business is operating in Nigeria, it is essential to understand the country’s VAT (Value-Added Tax) rules.

What is Value Added Tax?

VAT is a consumption tax in Nigeria that is applied to most products and services sold within the country. When selling products or services to Nigerian customers, you are required to add VAT to the sale.

What is the VAT rate in Nigeria?

Currently, the VAT rate is set at 7.5%, it was increased from 5% as of February 1, 2020.

Who pays VAT in Nigeria?

VAT is paid by the final consumer. All goods and services produced within or imported into the country are taxable except those specifically exempted by the VAT Act. 

Sales Registration Threshold

In Nigeria, there is an annual sales registration threshold of NGN 25,000,000. This means:
If your total sales in Nigeria are below NGN 25,000,000 in any rolling 12-month period, you don’t need to register for VAT. If your sales exceed NGN 25,000,000, you must register for VAT and comply with local tax regulations.

How to Register for VAT in Nigeria

You must register with the Nigerian tax authorities (FIRS) if your sales cross the threshold. The process involves:

  • Following the instructions on the FIRS portal to complete your registration.
  • Obtaining a VAT registration number, which is your unique identifier in the tax system. This number helps track your business’s tax activities, including the collection of VAT from customers.


Issuing VAT-Compliant Invoices

To remain compliant with Nigerian tax laws, your invoices must include:

  • Your business name and address
  • Your VAT registration number
  • The date of the invoice
  • An invoice number
  • A description of the goods or services sold
  • The VAT rate applied
  • The total amount including VAT

Using automated tax software can simplify this process. These tools can generate compliant invoices automatically and store them securely in the cloud, making it easy for you to keep track of your sales and taxes.

Filing VAT Returns

Collecting VAT is only half of the job, the other half is filing returns and paying what you owe. In Nigeria, businesses must file VAT returns monthly. You have up to 21 days after the end of each month to file your return and make any necessary payments.

Who is exempted from VAT in Nigeria?

If you want to know more about goods and services that are VAT exempted. Check here

My Final Thoughts

Navigating Nigerian VAT rules may seem challenging at first, but understanding the basics can save you from potential penalties and keep your business running smoothly. Keeping accurate records, registering when necessary, and filing timely returns are key to staying compliant. If in doubt, it is always a good idea to consult a tax professional for guidance.


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