Nigeria VAT Guide 2026

Overview — VAT in Nigeria

Value Added Tax (VAT) in Nigeria is a consumption tax levied at 7.5% on the supply of most goods and services. It was introduced in 1993 at 5% and increased to 7.5% effective 1 February 2020 via the Finance Act 2019. VAT is an invoice-based tax administered by FIRS. Businesses registered for VAT charge output VAT on their supplies and can recover input VAT on business purchases. The VAT Act exempts certain essential goods and services. The tax year runs on a calendar basis for VAT purposes.

Standard Rate — 7.5%

The standard VAT rate of 7.5% applies to all taxable supplies of goods and services not specifically exempted. This includes: general retail and wholesale goods, professional services, telecommunications, construction, transportation (other than mass transit), restaurant services, and entertainment. The 7.5% rate is relatively low by global standards (compared to 15% in Saudi Arabia or 20% in the UK) and is the subject of ongoing policy discussions about a potential increase to 10-15% in future years to boost government revenue.

Exempt Supplies

The following supplies are exempt from VAT (no VAT charged, and input VAT recovery restricted): basic food items (cereals, fish, flour, fruits, meat, vegetables, salt, milk, eggs, etc.), medical and pharmaceutical products, books and educational materials, baby products, car hire services (excluding leasing), mass transit (within Nigeria), residential property rent, and services provided by community banks, mortgage institutions, and microfinance banks. Non-oil exports are zero-rated, allowing input VAT recovery.

VAT Registration and Thresholds

Businesses with annual taxable turnover exceeding NGN 25 million must register for VAT. Businesses below this threshold may voluntarily register. Non-resident companies providing taxable services in Nigeria must register for VAT and charge VAT through a representative. Registration is done at the nearest FIRS Integrated Tax Office (ITO). There are penalties for late registration, failure to register, and failure to charge VAT.

VAT Returns and Filing

VAT returns are filed monthly on or before the 21st day of the following month. The return includes details of output VAT charged and input VAT claimed. Any net VAT due must be paid at the time of filing. Late filing penalties include NGN 25,000 in the first month and NGN 5,000 per month thereafter for companies, plus interest at the CBN minimum rediscount rate plus 5% on unpaid VAT. Electronic filing (e-VAT) is available through the FIRS portal.

Withholding VAT (WVAT)

Nigeria operates a Withholding VAT (WVAT) mechanism for supplies made to certain entities. Companies providing taxable supplies to the federal government, state governments, local governments, and their agencies must have 50% of the VAT withheld by the paying entity. The withheld VAT is remitted directly to FIRS by the payer. The supplier claims the withheld amount as input VAT when filing their own VAT return. This mechanism helps ensure VAT collection on government contracts.

FAQs

When was Nigeria's VAT rate increased to 7.5%?

The increase from 5% to 7.5% took effect on 1 February 2020, as part of the Finance Act 2019.

Are exports subject to VAT?

Non-oil exports are zero-rated, meaning no VAT is charged but the exporter can recover input VAT. Oil and gas exports have a separate tax regime.

What are the penalties for late VAT filing?

Late filing attracts a penalty of NGN 25,000 for the first month and NGN 5,000 per month thereafter, plus interest at CBN rate + 5% on the unpaid amount.

Disclaimer

This guide provides general information about VAT in Nigeria for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Nigerian tax advisor or FIRS directly for advice specific to your situation. InvestmentKit does not provide tax advice.