Everything you need to know about Value Added Tax — rates, exemptions, who pays, and how it works.
Value Added Tax (VAT) is a consumption tax added to the price of goods and services you buy. It's called "value added" because it's charged at each stage where value is added in the production and distribution process.
In Nigeria, the current VAT rate is 7.5%. When you buy something for ₦1,000, you're actually paying ₦1,075 — the extra ₦75 is VAT that goes to the government.
Unlike income tax (which you pay on what you earn), VAT is paid on what you spend. Every time you buy a VATable good or service, you contribute to government revenue.
Standard VAT rate in Nigeria (as of 2026)
Businesses registered with NRS collect and remit VAT
Businesses with ₦25M+ annual turnover must register
A simple breakdown of the VAT process from business to consumer.
When a business sells a product or service, they add 7.5% VAT to the selling price. For example, if a service costs ₦10,000, the customer pays ₦10,750 (₦10,000 + 7.5% VAT).
You (the customer) pay the full amount including VAT. The VAT is not a separate payment — it's included in the final price on your receipt.
The business collects VAT from all their customers, calculates the total, and sends it to the Nigeria Revenue Service (NRS) monthly by the 21st of the following month.
The VAT collected is shared among Federal (15%), State (50%), and Local Governments (35%) to fund public services, infrastructure, and development projects.
Not everything is subject to VAT. These items are exempt to protect essential goods and services.
As of January 1, 2026, Diesel (AGO), LPG (cooking gas), and CNG (compressed natural gas) are now VAT-exempt to reduce energy costs for Nigerians and businesses.
See how VAT affects everyday purchases.
What business owners need to know about VAT registration and compliance.
Your business must register for VAT if your annual turnover exceeds ₦25 million. Registration is done through the NRS TaxPro-Max portal.
Once registered, you must file VAT returns monthly by the 21st of the following month. You report all VAT collected from customers and remit it to NRS.
Late filing: ₦50,000 first offense, ₦25,000 for subsequent offenses
Non-remittance: 10% of tax due plus interest at commercial rate
Filing false returns: 150% of the amount attempted to be evaded
Yes. VAT is charged on imported goods at the point of entry. You'll pay VAT along with customs duties when clearing your goods.
Yes, if you're a VAT-registered business. You can claim input VAT (VAT you paid on business purchases) against output VAT (VAT you collected from customers) when filing your monthly returns.
Yes. VAT is a federal tax administered by NRS, so the 7.5% rate applies uniformly across Nigeria.
You're not required to register for VAT if your turnover is below ₦25 million annually. However, you can voluntarily register if you wish.
No! As of January 1, 2026, Diesel (AGO), LPG (cooking gas), and CNG (compressed natural gas) are now VAT-exempt. This means you no longer pay the 7.5% VAT on these energy products, reducing their cost.