VAT Details
VAT Breakdown
Nigerian VAT Categories 2026
The VAT Act (as amended by the Finance Acts and NTA 2026) defines three categories of supply.
| Category | Rate | Examples |
|---|---|---|
| Standard-rated | 7.5% | Most goods and services: retail, professional services, telecoms, manufacturing, construction, hospitality |
| Zero-rated | 0% | Exports of goods and services, basic unprocessed food items, medical and pharmaceutical products, educational books and materials, baby products |
| Exempt | N/A | Medical and dental services, educational services (tuition), financial services (interest), residential rent, public transport, small businesses below ₦25M annual turnover |
Source: VAT Act Cap V1 LFN 2004 (as amended); Finance Acts 2019–2023; Nigeria Tax Act 2026.
How Nigerian VAT Works
Register for VAT
Businesses with annual taxable turnover above ₦25 million must register for VAT with FIRS and obtain a TIN. Below this threshold, registration is optional but you cannot charge or recover VAT.
Charge Output VAT
Add 7.5% to the selling price of taxable goods and services. Issue a VAT invoice showing the pre-tax amount, VAT amount, and total inclusive of VAT.
Recover Input VAT
Deduct VAT you paid on business purchases (input VAT) from the VAT you collected (output VAT). Only the net difference is remitted to FIRS.
File & Remit Monthly
Submit Form 002 (VAT return) and remit the net VAT to FIRS on or before the 21st of the following month. Returns must be filed even if no transactions occurred.
Frequently Asked Questions
What is the current VAT rate in Nigeria?
The standard VAT rate is 7.5%, introduced by the Finance Act 2019 (increased from the prior 5%). The Nigeria Tax Act 2026 retained this rate. It applies to most goods and services supplied in Nigeria.
Who must register for VAT?
Any person or business that makes taxable supplies exceeding ₦25 million in annual turnover must register for VAT with FIRS. Businesses below this threshold are exempt from charging VAT but can voluntarily register to recover input VAT on purchases.
What is the difference between zero-rated and exempt?
Zero-rated supplies are taxable at 0% — the supplier charges no VAT but can still recover input VAT on related costs. Exempt supplies are outside the VAT net — the supplier charges no VAT but also cannot recover input VAT on costs incurred to make those supplies. This makes exemption potentially more costly for the supplier.
When must VAT be remitted to FIRS?
By the 21st day of the month following the month of supply. For example, VAT collected in July must be remitted by 21 August. A monthly VAT return (Form 002) must also be filed regardless of whether there were any transactions.
What are the penalties for late VAT remittance?
Late filing attracts a penalty of ₦50,000 for the first month and ₦25,000 for each subsequent month. Late payment attracts interest at the CBN Monetary Policy Rate plus 5%. FIRS can also conduct a VAT audit and issue additional assessments.
Is VAT charged on imported goods and services?
Yes. VAT is charged on imported goods at the point of entry (collected by Customs). For imported services (reverse charge), the recipient in Nigeria must self-account for and remit the VAT directly to FIRS — the foreign supplier does not collect it.