What is VAT (Value Added Tax)?

Value Added Tax (VAT) is a consumption tax levied on goods and services supplied in Nigeria and imported into Nigeria. It is currently charged at the rate of 7.5%. It can also be defined to be a tax on spending or consumption levied at every stage of transaction but eventually borne by the final consumer of such goods and services. 

There are some goods in Nigeria, which are specifically exempted from paying VAT as contained in the first schedule of the VAT Act, and they include medical and pharmaceutical products; basic food items; books and educational material; newspapers and magazines; baby products; commercial vehicles and their spare parts; agricultural equipment and products; and veterinary medicine

In Nigeria, only taxable persons with taxable supplies of Twenty-Five Million Naira and above are required to charge, remit, collect the tax, and file monthly returns to FIRS. In essence, a vatable person who has not attained N25 Million threshold is exempted from VAT obligations and penalties. VAT is paid through all FIRS-designated revenue-collecting banks into the VAT Pool Account. Taxes are to be paid in the currency of the transaction.

Who Should Register For Vat In Nigeria?

Both individual and corporate bodies so long as they are trading in goods and services. Businesses are expected to register for VAT within the first six months of the commencement of the business. Non-resident companies must register with the VAT office using the address of the person or business that is doing business within Nigeria. Correspondences related to VAT for this business will be sent to this address.

Required Documents to Register for VAT;

How To Register For VAT In Nigeria?

To register for VAT (Value Added Tax) in Nigeria, after getting your TIN, visit The tax station associated with your TIN with the required documents. Submit these documents to the tax officer. You will be informed on when you VAT will be available for collection.

Remember to keep your VAT certificate in a safe place, as you may need it for various business transactions and dealings with tax authorities. If you encounter any difficulties during the registration process, don’t hesitate to contact the FIRS for assistance.

Filing Of VAT Returns

The due date for the filing of VAT returns is on or before the 21st day of the month following the month of the transaction

What Is The Penalty Fr Not Registering For VAT in Nigeria?

A penalty of N10,000 for the first month in which the failure occurs and N5,000 for each subsequent month. If this persists, the business premises will be sealed up after a considered reasonable period.

Penalty for Non-Remittance of VAT

A penalty of a sum equal to 5% per annum plus interest at a commercial rate payable within 30 days of notification by the Tax Authority.

Penalty for Non-Deduction of VAT

Non-deduction or failure to collect tax by a taxable person attracts a penalty of 150% of the uncollected tax plus 5% interest above the CBN’s rediscount rate.

Who Receives VAT in Nigeria?

FIRS is the agency responsible for assessing tax and other revenues accruing to the Federal Government of Nigeria. Generally, each party in the chain of supply (manufacturer, wholesaler, and retailer) acts as a VAT collector. They collect VAT from their customer and include that VAT in their VAT return to the Federal Inland Revenue Service (FIRS) on or before the 21st day of the following month.  providers- MTN and Airtel; and money deposit banks, as VAT agents and mandates them to collect/withhold VAT on taxable supplies made to them.

For more enquiry on VAT, kindly contact us at SOW Professional Services Ltd.

Website: www.sowprofessional.com

Phone: 07038254989

WhatsApp: 08152451523