​Introduction
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Nigeria’s Value Added Tax system has undergone a major transformation with the Nigeria Tax Act 2025, which officially took effect on January 1, 2026. This reform consolidated over 60 disparate taxes into a modern framework, re-branded the tax authority, and introduced significant reliefs for small businesses and households.

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VAT (Value Added Tax) is a consumption tax levied on goods and services at the rate of 7.5% in Nigeria.   See summary below of goods and services which are vatable or exempt.
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Vatable Goods (7.5%)
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• Televisions 

• Telecommunications

• Electronics

• Professional Services

• Banking and advisory fees

• Furniture

• Bags

• Shoes

• Jewellery 

• Car parts

• Crypto Transactions

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Vatable Services (7.5%)
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• Accountancy

• Consultancy

• Engineering

• Legal 

• Catering

• Entertaining

• Motor Repairs

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Exempt Goods
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• Medical and pharmaceutical products

• Basic food 

• Baby products

• Books and educational materials

• Agricultural Machinery

• Commercial Aircraft / Engine's and spare parts

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Exempt Services
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• Medical services

• Banking

• Tuition / Education Services

• Airline Tickets

• Hire , rental, lease of agricultural equipment

• Exports of services

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Zero Rated
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• Export of Goods

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Non Resident Companies
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Non resident companies making taxable supplies of goods or services in Nigeria must register for VAT and can appoint a representative. 

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If the foreign supplier is not registered, the Nigerian customer's bank or payment processor may be directed by the NRS to withhold the 7.5% VAT at the point of payment.

 

Thresholds & Registrations​

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The 2026 reform significantly raised the bar for who must participate in the VAT system, exempting many micro and small enterprises.

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• Domestic Businesses: You are only required to register and charge VAT if your annual turnover exceeds ₦50 million (raised from ₦25 million).

  • Small Companies (≤ ₦50m): Do not charge VAT but cannot reclaim input VAT on purchases.

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• Non-Resident Suppliers (Digital Services): Foreign companies (like Netflix, Google, or SaaS providers) must register if their annual Nigerian turnover exceeds $25,000.

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• Mandatory TIN: The Tax Identification Number (TIN) is now harmonized with the National Identification Number (NIN). Every VAT-registered business must use its TIN on all invoices.

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Input VAT Recovery

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Nigeria uses a restricted "Input-Output" mechanism. You can only reclaim VAT paid on goods that are purchased for resale or used directly in the production of new goods.

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• Recoverable: VAT on raw materials and stock-in-trade.

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• Non-Recoverable: VAT on "overheads" (rent, electricity, professional fees) and capital expenditure (machinery, vehicles). These must be capitalized or treated as an expense in your Income Tax return.

• 2026 Refund Update: The NRS has introduced an automated refund system for exporters and businesses with consistent 0% rated supplies, provided they use the e-invoicing portal.

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E Invoicing and Digital Services ​

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The Federal Inland Revenue Service (FIRS) has been officially renamed the Nigeria Revenue Service (NRS) as of 2026.

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From 1, 2026, Nigeria has introduced mandatory e-invoicing for all medium and small VAT-registered businesses.

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• Invoices must be generated in a structured XML/JSON format.

• They must be transmitted in real-time to the NRS's

• Non-compliance or failure to issue a valid e-invoice can result in a fine equal to 50% of the invoice value.

 

VAT Return Filing Deadlines and Penalties​

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Compliance is strictly monthly.

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• Deadline: Returns and payments must be submitted by the 21st day of the following month.

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• Currency: If you transact in foreign currency (USD, GBP, EUR), you must remit the VAT in that same currency.

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