Nigeria VAT (Value Added Tax) Skill v2.0

---

Section 1 — Quick reference

Field	Value
Country	Nigeria (Federal Republic of Nigeria)
Tax	Value Added Tax (VAT)
Currency	NGN (Nigerian Naira — ₦)
Standard rate	7.5% (effective February 2020; previously 5%)
Zero rate	0% (exports of goods and services, goods purchased by diplomats, humanitarian donor organisations)
Exempt	Basic food items (unprocessed agricultural products), medical/pharmaceutical products, baby products, newspapers, educational materials, financial services, natural gas, exported services
Registration threshold	NGN 25,000,000 annual turnover (from 2020); below this — no obligation to register
Tax authority	Federal Inland Revenue Service (FIRS)
Filing portal	FIRS TaxPro Max — https://taxpromax.firs.gov.ng
Return form	VAT Form 002 (monthly return)
Filing frequency	Monthly
Deadline	21st of the following month
e-Invoice	FIRS e-Invoice / e-Receipt pilot — expanding from 2024
Contributor	Open Accountants Community
Validated by	Pending — requires sign-off by a Nigeria-licensed tax practitioner (CITN)
Skill version	2.0

Key VAT Form 002 lines

Line	Meaning
Line 1	Total taxable sales (net of VAT)
Line 2	VAT on sales (Line 1 × 7.5%)
Line 3	Zero-rated sales
Line 4	Exempt sales
Line 5	Total input VAT (on purchases for taxable activities)
Line 6	Net VAT payable (Line 2 − Line 5)
Line 7	Excess input VAT carried forward

Conservative defaults

Ambiguity	Default
Unknown rate on a sale	7.5% standard
Unknown whether food is processed/unprocessed	Treat as processed — 7.5% until confirmed
Unknown whether pharmaceutical is exempt	7.5% until exemption confirmed with NAFDAC registration
Unknown whether export documentation complete	Treat as domestic 7.5%
Unknown business-use %	0% input credit
Foreign digital service (B2B)	7.5% reverse-charge — buyer self-assesses
Unknown whether NGN 25M threshold met	Assume must file

Red flag thresholds

Threshold	Value
HIGH single transaction	NGN 10,000,000
HIGH tax delta on single conservative default	NGN 750,000
MEDIUM counterparty concentration	>40% of output or input
MEDIUM conservative default count	>4 per return
LOW absolute net VAT position	NGN 5,000,000

---

Section 2 — Required inputs and refusal catalogue

Required inputs

Before starting any Nigeria VAT work, obtain:

1. FIRS TIN (Tax Identification Number — 10 digits) and VAT registration certificate
2. Monthly bank statements in NGN (all business accounts)
3. Sales invoices with VAT registration number (VRN) printed
4. Purchase invoices from VAT-registered suppliers with their VRN
5. Prior month VAT return (for carried-forward excess input credit)
6. Export documentation (form NXP, shipping documents) for zero-rated exports
7. Details of exempt supplies (basic foodstuffs, medical goods) with product descriptions

Refusal catalogue

Refuse and escalate to a CITN-licensed tax practitioner for:

• VAT on imported services — complex FIRS guidance and WHT interaction
• VAT grouping (rare in Nigeria)
• Petroleum Profit Tax (PPT) — separate legislation
• Real estate VAT (complex exemption rules on land vs. buildings)
• VAT refund claims — FIRS refund process is complex and slow; requires specialist
• State-level consumption taxes (Lagos, Rivers) — in addition to federal VAT
• Free trade zone (FTZ) VAT treatment

---

Section 3 — Supplier pattern library

3.1 Banking and financial services

Supplier	Typical description	VAT rate	Input credit
Guaranty Trust Bank (GTBank)	Bank fees, transfer charges	Exempt	No
Zenith Bank	Account maintenance, corporate banking	Exempt	No
Access Bank	Business banking fees	Exempt	No
First Bank Nigeria	Commercial banking	Exempt	No
United Bank for Africa (UBA)	Pan-African banking fees	Exempt	No
Stanbic IBTC	Investment banking, advisory	Exempt	No
Flutterwave	Payment gateway — processing fee	7.5%	Yes
Paystack	Payment gateway — commission	7.5%	Yes
Interswitch	Card switching, POS services	7.5%	Yes
PalmPay	Mobile payments	Exempt (payment)	No
Opay	Digital wallet	Exempt	No

3.2 Electricity and utilities

Supplier	Typical description	VAT rate	Input credit
Eko Electricity Distribution Company (EKEDC)	Electricity — Lagos Island/mainland south	7.5%	Yes (business)
Ikeja Electric (IKEDC)	Electricity — Lagos Ikeja/mainland north	7.5%	Yes (business)
Abuja Electricity Distribution Company (AEDC)	Electricity — FCT Abuja	7.5%	Yes (business)
Lagos State Water Corporation	Water supply	7.5%	Yes
LSWC / State water boards	Water — various states	7.5%	Yes
Lagos Waste Management Authority (LAWMA)	Waste disposal	7.5%	Yes

3.3 Telecommunications

Supplier	Typical description	VAT rate	Input credit
MTN Nigeria	Mobile, data	7.5%	Yes (business use)
Airtel Nigeria	Mobile, broadband	7.5%	Yes (business use)
Glo (Globacom)	Mobile, data	7.5%	Yes (business use)
9mobile (etisalat)	Mobile, business lines	7.5%	Yes (business use)
IPNX	Fiber internet — enterprise	7.5%	Yes
Spectranet	Fixed wireless broadband	7.5%	Yes
Swift Networks	Enterprise connectivity	7.5%	Yes

3.4 Transport and travel

Supplier	Typical description	VAT rate	Input credit
Air Peace	Domestic flights	7.5%	Yes
Ibom Air	Domestic flights	7.5%	Yes
United Nigeria Airlines	Domestic flights	7.5%	Yes
Ethiopian Airlines Nigeria	International flights	0% (export)	No input applicable
Bolt Nigeria	Ride-hailing	7.5%	Yes (business use)
Uber Nigeria	Ride-hailing	7.5%	Yes (business use)
Rensource / Tricycle services	Local transport	7.5%	Yes

3.5 Logistics and courier

Supplier	Typical description	VAT rate	Input credit
DHL Nigeria	International courier	0% (export) / 7.5% (domestic)	Yes
FedEx Nigeria	International courier	0% / 7.5%	Yes
GIG Logistics	Domestic courier	7.5%	Yes
ABC Cargo	Domestic freight	7.5%	Yes
Kwik Delivery	Last-mile delivery	7.5%	Yes
NIPOST	Nigerian postal service	7.5%	Yes

3.6 Retail and office supplies

Supplier	Typical description	VAT rate	Input credit
Jumia Nigeria	E-commerce marketplace	7.5% (taxable goods)	Yes (business)
Konga	E-commerce	7.5%	Yes
Shoprite Nigeria	Supermarket — food/non-food	Mixed (basic food exempt; other 7.5%)	Partial
SPAR Nigeria	Supermarket	Mixed	Partial
Staples Nigeria / Office supplies store	Office stationery	7.5%	Yes
Dangote Industries (cement)	Building materials	7.5%	Yes
Copy Shop / printing	Document printing	7.5%	Yes

3.7 Software and digital services

Supplier	Typical description	VAT rate	Input credit
Sage Nigeria	Accounting software	7.5%	Yes
VFD Tech / Mono	Fintech API	7.5%	Yes
Microsoft Nigeria (Azure, M365)	Cloud services — B2B	7.5% (reverse-charge)	Yes
Google Nigeria (Workspace, Ads)	Digital services — B2B	7.5% (reverse-charge)	Yes
Zoom Nigeria	Video conferencing — B2B	7.5% (reverse-charge)	Yes
AWS Nigeria	Cloud infrastructure — B2B	7.5% (reverse-charge)	Yes
Zoho Nigeria	Business software	7.5% (reverse-charge if foreign)	Yes

3.8 Professional services

Supplier	Typical description	VAT rate	Input credit
Chartered Accountant (ICAN/ANAN)	Audit, tax advisory	7.5%	Yes
Law firm	Legal services	7.5%	Yes
Consulting firm	Management consulting	7.5%	Yes
Advertising agency	Marketing services	7.5%	Yes
CITN-registered tax practitioner	Tax compliance	7.5%	Yes

3.9 Insurance

Supplier	Typical description	VAT rate	Input credit
AIICO Insurance	Business insurance	Exempt	No
Leadway Assurance	Property, liability	Exempt	No
AXA Mansard	Health, motor	Exempt	No
Cornerstone Insurance	All lines	Exempt	No
Stanbic IBTC Insurance	Life, annuity	Exempt	No

3.10 Basic foodstuffs and exempt goods

Supplier	Typical description	VAT rate	Input credit
Unprocessed agricultural produce (farm direct)	Rice, yam, vegetables — unprocessed	Exempt	No
Processed food manufacturers (e.g., Nestle, Cadbury)	Processed packaged food	7.5%	Yes
Baby products (Pampers, etc.)	Diapers, formula	Exempt	No
Pharmaceutical manufacturers	Medicines — registered with NAFDAC	Exempt	No
Newspapers / educational textbooks	Print media, school books	Exempt	No

---

Section 4 — Worked examples

Example 1 — Standard VAT on consulting service

Scenario: Lagos-based IT firm issues invoice to Nigerian corporate client.

Bank statement line (GTBank format):

Date        : 15/04/2025
Narration   : CREDIT TRANSFER — ACME CORP LTD — INV-2025-041 — IT CONSULTING
Amount      : +NGN 5,375,000.00
Balance     : NGN 25,375,000.00

Working:

• Invoice: net NGN 5,000,000 + VAT 7.5% NGN 375,000 = NGN 5,375,000
• Return entry: Line 1 — NGN 5,000,000 | Output VAT: NGN 375,000

---

Example 2 — Exempt basic food sale

Scenario: Agricultural trader sells unprocessed yams to market.

Bank statement line (Zenith Bank format):

Date        : 10/04/2025
Description : PAYMENT — ALABA MARKET TRADERS — FARM PRODUCE SUPPLY
Reference   : INV-AGR-2025-010
Amount      : +NGN 2,000,000.00

Working:

• Unprocessed agricultural produce — exempt from VAT
• Return entry: Line 4 (Exempt) — NGN 2,000,000 | VAT: NGN 0
• No output VAT; no input credit on related purchases

---

Example 3 — Electricity bill (business premises)

Scenario: Company pays EKEDC electricity bill for April 2025.

Bank statement line (Access Bank format):

Date        : 25/04/2025
Narration   : EKEDC BILL PAYMENT — APRIL 2025 — ACCT: 0123456789
Amount      : -NGN 2,150,000.00

Working:

• EKEDC invoice: net NGN 2,000,000 + VAT 7.5% NGN 150,000 = NGN 2,150,000
• 100% business use (office premises)
• Return entry: Line 5 (Input VAT) — NGN 150,000

---

Example 4 — Reverse-charge on foreign digital service

Scenario: Company pays for Microsoft Azure (billed from Microsoft Ireland).

Bank statement line (First Bank format):

Date        : 05/04/2025
Narration   : INTL PAYMENT — MICROSOFT IRELAND — AZURE SERVICES APR 2025
Amount      : -NGN 11,200,000.00

Working:

• Foreign digital service to Nigerian business — self-assess VAT under FIRS guidance
• Self-assess: NGN 11,200,000 × 7.5/107.5 = NGN 781,395 VAT
• Declare as output AND claim as input — net zero for fully taxable business

---

Example 5 — Export of software (zero-rated)

Scenario: Nigerian tech company exports software license to UK client.

Bank statement line (UBA format):

Date        : 20/04/2025
Narration   : SWIFT CREDIT — UK TECH LTD — SOFTWARE LICENSE Q1 2025
Amount      : +NGN 15,000,000.00 (USD 9,000)

Working:

• Export of service to non-resident — zero-rated
• Requires: contract, foreign bank transfer evidence, NXP form
• Return entry: Line 3 (Zero-rated) — NGN 15,000,000 | VAT: NGN 0

---

Example 6 — Monthly return summary

Scenario: Manufacturing company — April 2025.

Item	Net (NGN)	VAT (NGN)
Domestic taxable sales	50,000,000	3,750,000
Export sales (0%)	20,000,000	0
Exempt sales (basic food)	10,000,000	0
Total Output	80,000,000	3,750,000
Input on taxable purchases	30,000,000	2,250,000
Net VAT payable		1,500,000

---

Section 5 — Tier 1 rules (compressed)

Rate assignment:

• 7.5% standard: all goods and services not specifically exempt or zero-rated
• 0%: exports of goods and services with proper documentation, diplomatic purchases, goods for humanitarian organisations
• Exempt: basic unprocessed food items, medical/pharmaceutical products (NAFDAC-registered), baby products, financial services, insurance, educational materials (not stationery), newspapers, natural gas (domestic), exported services

Input credit:

• Credit allowed on VAT paid on purchases used for taxable activities
• Must have valid VAT invoice from VAT-registered supplier (with their VRN)
• No credit on exempt purchases or purchases unrelated to taxable activities
• No credit if supplier is below the NGN 25M registration threshold (they should not be charging VAT)
• Reverse-charge on foreign digital services: output and input net to zero for fully taxable businesses

Filing mechanics:

• File VAT Form 002 monthly via FIRS TaxPro Max by 21st of following month
• Also file WHT returns if subject to withholding — separate form
• Excess input VAT carries forward; FIRS refunds are slow — expect 90+ days
• Remit VAT collected from customers to FIRS monthly (not annual)

---

Section 6 — Tier 2 catalogue (genuinely data-unknowable items)

Item	Why unknowable	What to ask
Food product classification	Processed (7.5%) vs unprocessed/basic (exempt) depends on product detail	"Is this raw agricultural produce or processed/packaged food? NAFDAC registration?"
Pharmaceutical exemption	Only NAFDAC-registered medicines exempt	"What is the product? Provide NAFDAC registration number."
Export documentation	Zero-rate requires NXP form, shipping docs	"Provide export documentation — NXP form and freight evidence."
Foreign digital service	B2B (reverse-charge) vs B2C	"Is the Nigerian entity VAT-registered? Does supplier have your TIN?"
Real estate transaction	Land (exempt) vs building services (7.5%)	"Is this land only, or construction/building services?"
Sub-NGN 25M supplier	Should not be charging VAT — no input credit	"Confirm supplier's annual turnover and VAT registration status."

---

Section 7 — Excel working paper

Columns: Date | Supplier/Customer | VRN | Invoice No. | Net (NGN) | VAT Rate % | VAT (NGN) | In/Out | Zero-rated? | Exempt? | Tier 2 flag | Notes

Tab structure:

1. Output_Sales — all sales by type (taxable/zero-rated/exempt)
2. Input_Purchases — all purchases with VAT credit
3. ReverseCharge_Foreign — foreign services
4. VAT_Summary — monthly Form 002 totals
5. Tier2_Items — awaiting client response

---

Section 8 — Bank statement reading guide

GTBank format

Date        : 15/04/2025
Narration   : CREDIT TRANSFER — COMPANY NAME — INV-2025-041 — DESCRIPTION
Amount      : +NGN 5,375,000.00
Balance     : NGN 25,375,000.00

Zenith Bank format

15/04/2025  |  TRF FROM ACME CORP  |  +5,375,000.00  |  BAL: 25,375,000.00

Key patterns:

• NGN number format: Comma = thousands; period = decimal (NGN 5,375,000.00)
• INTL PAYMENT / SWIFT: Foreign payment — check for export zero-rate or reverse-charge
• BILL PAYMENT: Utility payments — usually include VAT; request invoice
• CREDIT TRANSFER: Domestic wire — match to issued invoice for output VAT

---

Section 9 — Onboarding fallback

When client cannot provide VAT invoices for all transactions:

1. Use bank statement amounts as VAT-inclusive totals and back-calculate:
   • Net = Total ÷ 1.075 | VAT = Total − Net
2. Apply conservative defaults: 7.5% output on all unverified taxable sales; 0% input credit without valid VRN invoice
3. Flag all items without VRN invoices in Tier2_Items tab
4. Issue data request listing missing invoice references
5. Warn client: FIRS can disallow input credit claims without valid VAT invoices from registered suppliers

---

Section 10 — Reference material

Resource	Reference
FIRS TaxPro Max (filing portal)	https://taxpromax.firs.gov.ng
FIRS main portal	https://www.firs.gov.ng
VAT Act (as amended by Finance Act 2019/2020)	FIRS website — legislation
Finance Act 2020 — VAT rate increase to 7.5%	Official Gazette
VAT registration threshold guidance	FIRS circular 2020
FIRS e-Invoice pilot	FIRS announcements — 2024

---

Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, EA, tax attorney, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon.

The most up-to-date, verified version of this skill is maintained at openaccountants.com. Log in to access the latest version, request a professional review from a licensed accountant, and track updates as tax law changes.