VAT in Nigeria 2026: Everything You Need to Know

Value Added Tax (VAT) is the tax you pay on almost everything you buy. Whether you are a consumer wondering why prices keep going up, or a business owner trying to stay compliant, VAT is unavoidable. Here is your complete guide.

What Is VAT?

VAT is a consumption tax charged on goods and services at each stage of the supply chain. In Nigeria, it is administered by the Nigeria Revenue Service (NRS) and the rate is 7.5%.

How VAT Works in Practice:

1. •A manufacturer produces a product and charges VAT on the sale price
2. •A distributor buys it, pays the VAT, then charges VAT when selling to retailers
3. •Retailers do the same when selling to consumers
4. •Each party only remits the VAT they added (output VAT minus input VAT)
5. •The consumer ultimately bears the full 7.5%

VAT Rate and Threshold

• •Standard rate: 7.5% (increased from 5% in February 2020)
• •Registration threshold: Businesses with annual turnover of NGN 25 million or more MUST register for VAT
• •Below threshold: Voluntary registration is allowed but not mandatory

Who Must Register?

• •Any business with turnover above NGN 25 million annually
• •Foreign digital service providers serving Nigerian customers
• •Importers of goods and services

VAT-Exempt Items

Not everything carries VAT. The following are exempt:

Basic Food Items

• •Brown bread
• •Flour and flour products
• •Fish and fish products
• •Livestock and poultry
• •Beans, rice, maize, millet, guinea corn, yam
• •Fruits and vegetables
• •Roots and tubers

Medical and Educational

• •Medical and pharmaceutical products
• •Educational materials (books, notebooks)
• •Baby products

Other Exemptions

• •Newspapers and magazines
• •Commercial aircraft and spare parts
• •Gas (cooking gas)
• •Residential rent
• •Tuition fees (primary through tertiary)

Zero-Rated vs Exempt

There is a difference:

• •Zero-rated: VAT is charged at 0%, but the supplier can claim back input VAT
• •Exempt: No VAT charged, and the supplier CANNOT claim back input VAT

VAT for Businesses

How to Register

1. •Visit the NRS TaxProMax portal
2. •Complete VAT registration form
3. •Provide your TIN and business details
4. •Receive your VAT registration certificate

Filing and Payment

• •Frequency: Monthly
• •Deadline: 21st of the month following the reporting period
• •Example: January VAT must be filed and paid by February 21

How to Calculate VAT

If you sell goods worth NGN 1,000,000:

• •VAT to charge: 7.5% × NGN 1,000,000 = NGN 75,000
• •Customer pays: NGN 1,075,000

If you bought inputs worth NGN 600,000 (VAT paid: NGN 45,000):

• •Net VAT to remit: NGN 75,000 - NGN 45,000 = NGN 30,000

Penalties for Non-Compliance

• •Late registration: NGN 10,000 + NGN 5,000 per month
• •Late filing: NGN 5,000 first month, NGN 2,500 each subsequent month
• •Failure to remit: 5% interest per month on the outstanding amount

VAT on Digital Services

If you are a foreign company providing digital services to Nigerians (Netflix, Spotify, software subscriptions), you must:

1. •Register for VAT in Nigeria
2. •Charge 7.5% VAT on services to Nigerian customers
3. •Remit monthly to NRS

This applies to streaming, cloud services, software, advertising, and online marketplace services.

VAT on Imports

Imported goods attract VAT at the point of customs clearance:

• •Calculated on the CIF value (Cost + Insurance + Freight) plus import duty
• •Paid to Nigeria Customs Service at the port
• •Importers can claim this as input VAT if registered

How VAT Affects You as a Consumer

Every time you buy something that is not exempt, you pay 7.5% VAT. On a NGN 10,000 purchase:

• •Base price: NGN 9,302
• •VAT: NGN 698

Over a year, most Nigerians pay thousands of naira in VAT without realizing it. The only way to avoid it is to buy only exempt items — which is almost impossible.

VAT Compliance Made Simple

Understanding VAT is one thing, managing it is another. Taxee helps businesses track their VAT obligations and individuals understand the true cost of goods after tax.

Calculate your full tax picture →