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openaccountants/skills/nigeria-vat.md
nigeria-vat.md422 lines16.7 KB
v20
1---
2name: nigeria-vat
3description: Use this skill whenever asked to prepare, review, or classify transactions for a Nigeria VAT return or advise on Nigerian VAT registration, filing, and compliance. Trigger on phrases like "prepare Nigeria VAT return", "Nigerian VAT", "FIRS VAT", "Form 002", or any Nigeria VAT request. ALWAYS read this skill before touching any Nigeria VAT work.
4version: 2.0
5jurisdiction: NG
6tax_year: 2025
7category: international
8depends_on:
9 - vat-workflow-base
10---
11 
12# Nigeria VAT (Value Added Tax) Skill v2.0
13 
14---
15 
16## Section 1 — Quick reference
17 
18| Field | Value |
19|---|---|
20| Country | Nigeria (Federal Republic of Nigeria) |
21| Tax | Value Added Tax (VAT) |
22| Currency | NGN (Nigerian Naira — ₦) |
23| Standard rate | 7.5% (effective February 2020; previously 5%) |
24| Zero rate | 0% (exports of goods and services, goods purchased by diplomats, humanitarian donor organisations) |
25| Exempt | Basic food items (unprocessed agricultural products), medical/pharmaceutical products, baby products, newspapers, educational materials, financial services, natural gas, exported services |
26| Registration threshold | NGN 25,000,000 annual turnover (from 2020); below this — no obligation to register |
27| Tax authority | Federal Inland Revenue Service (FIRS) |
28| Filing portal | FIRS TaxPro Max — https://taxpromax.firs.gov.ng |
29| Return form | VAT Form 002 (monthly return) |
30| Filing frequency | Monthly |
31| Deadline | 21st of the following month |
32| e-Invoice | FIRS e-Invoice / e-Receipt pilot — expanding from 2024 |
33| Contributor | Open Accountants Community |
34| Validated by | Pending — requires sign-off by a Nigeria-licensed tax practitioner (CITN) |
35| Skill version | 2.0 |
36 
37### Key VAT Form 002 lines
38 
39| Line | Meaning |
40|---|---|
41| Line 1 | Total taxable sales (net of VAT) |
42| Line 2 | VAT on sales (Line 1 × 7.5%) |
43| Line 3 | Zero-rated sales |
44| Line 4 | Exempt sales |
45| Line 5 | Total input VAT (on purchases for taxable activities) |
46| Line 6 | Net VAT payable (Line 2 − Line 5) |
47| Line 7 | Excess input VAT carried forward |
48 
49### Conservative defaults
50 
51| Ambiguity | Default |
52|---|---|
53| Unknown rate on a sale | 7.5% standard |
54| Unknown whether food is processed/unprocessed | Treat as processed — 7.5% until confirmed |
55| Unknown whether pharmaceutical is exempt | 7.5% until exemption confirmed with NAFDAC registration |
56| Unknown whether export documentation complete | Treat as domestic 7.5% |
57| Unknown business-use % | 0% input credit |
58| Foreign digital service (B2B) | 7.5% reverse-charge — buyer self-assesses |
59| Unknown whether NGN 25M threshold met | Assume must file |
60 
61### Red flag thresholds
62 
63| Threshold | Value |
64|---|---|
65| HIGH single transaction | NGN 10,000,000 |
66| HIGH tax delta on single conservative default | NGN 750,000 |
67| MEDIUM counterparty concentration | >40% of output or input |
68| MEDIUM conservative default count | >4 per return |
69| LOW absolute net VAT position | NGN 5,000,000 |
70 
71---
72 
73## Section 2 — Required inputs and refusal catalogue
74 
75### Required inputs
76 
77Before starting any Nigeria VAT work, obtain:
78 
791. FIRS TIN (Tax Identification Number — 10 digits) and VAT registration certificate
802. Monthly bank statements in NGN (all business accounts)
813. Sales invoices with VAT registration number (VRN) printed
824. Purchase invoices from VAT-registered suppliers with their VRN
835. Prior month VAT return (for carried-forward excess input credit)
846. Export documentation (form NXP, shipping documents) for zero-rated exports
857. Details of exempt supplies (basic foodstuffs, medical goods) with product descriptions
86 
87### Refusal catalogue
88 
89Refuse and escalate to a CITN-licensed tax practitioner for:
90- VAT on imported services — complex FIRS guidance and WHT interaction
91- VAT grouping (rare in Nigeria)
92- Petroleum Profit Tax (PPT) — separate legislation
93- Real estate VAT (complex exemption rules on land vs. buildings)
94- VAT refund claims — FIRS refund process is complex and slow; requires specialist
95- State-level consumption taxes (Lagos, Rivers) — in addition to federal VAT
96- Free trade zone (FTZ) VAT treatment
97 
98---
99 
100## Section 3 — Supplier pattern library
101 
102### 3.1 Banking and financial services
103 
104| Supplier | Typical description | VAT rate | Input credit |
105|---|---|---|---|
106| Guaranty Trust Bank (GTBank) | Bank fees, transfer charges | Exempt | No |
107| Zenith Bank | Account maintenance, corporate banking | Exempt | No |
108| Access Bank | Business banking fees | Exempt | No |
109| First Bank Nigeria | Commercial banking | Exempt | No |
110| United Bank for Africa (UBA) | Pan-African banking fees | Exempt | No |
111| Stanbic IBTC | Investment banking, advisory | Exempt | No |
112| Flutterwave | Payment gateway — processing fee | 7.5% | Yes |
113| Paystack | Payment gateway — commission | 7.5% | Yes |
114| Interswitch | Card switching, POS services | 7.5% | Yes |
115| PalmPay | Mobile payments | Exempt (payment) | No |
116| Opay | Digital wallet | Exempt | No |
117 
118### 3.2 Electricity and utilities
119 
120| Supplier | Typical description | VAT rate | Input credit |
121|---|---|---|---|
122| Eko Electricity Distribution Company (EKEDC) | Electricity — Lagos Island/mainland south | 7.5% | Yes (business) |
123| Ikeja Electric (IKEDC) | Electricity — Lagos Ikeja/mainland north | 7.5% | Yes (business) |
124| Abuja Electricity Distribution Company (AEDC) | Electricity — FCT Abuja | 7.5% | Yes (business) |
125| Lagos State Water Corporation | Water supply | 7.5% | Yes |
126| LSWC / State water boards | Water — various states | 7.5% | Yes |
127| Lagos Waste Management Authority (LAWMA) | Waste disposal | 7.5% | Yes |
128 
129### 3.3 Telecommunications
130 
131| Supplier | Typical description | VAT rate | Input credit |
132|---|---|---|---|
133| MTN Nigeria | Mobile, data | 7.5% | Yes (business use) |
134| Airtel Nigeria | Mobile, broadband | 7.5% | Yes (business use) |
135| Glo (Globacom) | Mobile, data | 7.5% | Yes (business use) |
136| 9mobile (etisalat) | Mobile, business lines | 7.5% | Yes (business use) |
137| IPNX | Fiber internet — enterprise | 7.5% | Yes |
138| Spectranet | Fixed wireless broadband | 7.5% | Yes |
139| Swift Networks | Enterprise connectivity | 7.5% | Yes |
140 
141### 3.4 Transport and travel
142 
143| Supplier | Typical description | VAT rate | Input credit |
144|---|---|---|---|
145| Air Peace | Domestic flights | 7.5% | Yes |
146| Ibom Air | Domestic flights | 7.5% | Yes |
147| United Nigeria Airlines | Domestic flights | 7.5% | Yes |
148| Ethiopian Airlines Nigeria | International flights | 0% (export) | No input applicable |
149| Bolt Nigeria | Ride-hailing | 7.5% | Yes (business use) |
150| Uber Nigeria | Ride-hailing | 7.5% | Yes (business use) |
151| Rensource / Tricycle services | Local transport | 7.5% | Yes |
152 
153### 3.5 Logistics and courier
154 
155| Supplier | Typical description | VAT rate | Input credit |
156|---|---|---|---|
157| DHL Nigeria | International courier | 0% (export) / 7.5% (domestic) | Yes |
158| FedEx Nigeria | International courier | 0% / 7.5% | Yes |
159| GIG Logistics | Domestic courier | 7.5% | Yes |
160| ABC Cargo | Domestic freight | 7.5% | Yes |
161| Kwik Delivery | Last-mile delivery | 7.5% | Yes |
162| NIPOST | Nigerian postal service | 7.5% | Yes |
163 
164### 3.6 Retail and office supplies
165 
166| Supplier | Typical description | VAT rate | Input credit |
167|---|---|---|---|
168| Jumia Nigeria | E-commerce marketplace | 7.5% (taxable goods) | Yes (business) |
169| Konga | E-commerce | 7.5% | Yes |
170| Shoprite Nigeria | Supermarket — food/non-food | Mixed (basic food exempt; other 7.5%) | Partial |
171| SPAR Nigeria | Supermarket | Mixed | Partial |
172| Staples Nigeria / Office supplies store | Office stationery | 7.5% | Yes |
173| Dangote Industries (cement) | Building materials | 7.5% | Yes |
174| Copy Shop / printing | Document printing | 7.5% | Yes |
175 
176### 3.7 Software and digital services
177 
178| Supplier | Typical description | VAT rate | Input credit |
179|---|---|---|---|
180| Sage Nigeria | Accounting software | 7.5% | Yes |
181| VFD Tech / Mono | Fintech API | 7.5% | Yes |
182| Microsoft Nigeria (Azure, M365) | Cloud services — B2B | 7.5% (reverse-charge) | Yes |
183| Google Nigeria (Workspace, Ads) | Digital services — B2B | 7.5% (reverse-charge) | Yes |
184| Zoom Nigeria | Video conferencing — B2B | 7.5% (reverse-charge) | Yes |
185| AWS Nigeria | Cloud infrastructure — B2B | 7.5% (reverse-charge) | Yes |
186| Zoho Nigeria | Business software | 7.5% (reverse-charge if foreign) | Yes |
187 
188### 3.8 Professional services
189 
190| Supplier | Typical description | VAT rate | Input credit |
191|---|---|---|---|
192| Chartered Accountant (ICAN/ANAN) | Audit, tax advisory | 7.5% | Yes |
193| Law firm | Legal services | 7.5% | Yes |
194| Consulting firm | Management consulting | 7.5% | Yes |
195| Advertising agency | Marketing services | 7.5% | Yes |
196| CITN-registered tax practitioner | Tax compliance | 7.5% | Yes |
197 
198### 3.9 Insurance
199 
200| Supplier | Typical description | VAT rate | Input credit |
201|---|---|---|---|
202| AIICO Insurance | Business insurance | Exempt | No |
203| Leadway Assurance | Property, liability | Exempt | No |
204| AXA Mansard | Health, motor | Exempt | No |
205| Cornerstone Insurance | All lines | Exempt | No |
206| Stanbic IBTC Insurance | Life, annuity | Exempt | No |
207 
208### 3.10 Basic foodstuffs and exempt goods
209 
210| Supplier | Typical description | VAT rate | Input credit |
211|---|---|---|---|
212| Unprocessed agricultural produce (farm direct) | Rice, yam, vegetables — unprocessed | Exempt | No |
213| Processed food manufacturers (e.g., Nestle, Cadbury) | Processed packaged food | 7.5% | Yes |
214| Baby products (Pampers, etc.) | Diapers, formula | Exempt | No |
215| Pharmaceutical manufacturers | Medicines — registered with NAFDAC | Exempt | No |
216| Newspapers / educational textbooks | Print media, school books | Exempt | No |
217 
218---
219 
220## Section 4 — Worked examples
221 
222### Example 1 — Standard VAT on consulting service
223 
224**Scenario:** Lagos-based IT firm issues invoice to Nigerian corporate client.
225 
226**Bank statement line (GTBank format):**
227```
228Date : 15/04/2025
229Narration : CREDIT TRANSFER — ACME CORP LTD — INV-2025-041 — IT CONSULTING
230Amount : +NGN 5,375,000.00
231Balance : NGN 25,375,000.00
232```
233 
234**Working:**
235- Invoice: net NGN 5,000,000 + VAT 7.5% NGN 375,000 = NGN 5,375,000
236- Return entry: Line 1 — NGN 5,000,000 | Output VAT: NGN 375,000
237 
238---
239 
240### Example 2 — Exempt basic food sale
241 
242**Scenario:** Agricultural trader sells unprocessed yams to market.
243 
244**Bank statement line (Zenith Bank format):**
245```
246Date : 10/04/2025
247Description : PAYMENT — ALABA MARKET TRADERS — FARM PRODUCE SUPPLY
248Reference : INV-AGR-2025-010
249Amount : +NGN 2,000,000.00
250```
251 
252**Working:**
253- Unprocessed agricultural produce — exempt from VAT
254- Return entry: Line 4 (Exempt) — NGN 2,000,000 | VAT: NGN 0
255- No output VAT; no input credit on related purchases
256 
257---
258 
259### Example 3 — Electricity bill (business premises)
260 
261**Scenario:** Company pays EKEDC electricity bill for April 2025.
262 
263**Bank statement line (Access Bank format):**
264```
265Date : 25/04/2025
266Narration : EKEDC BILL PAYMENT — APRIL 2025 — ACCT: 0123456789
267Amount : -NGN 2,150,000.00
268```
269 
270**Working:**
271- EKEDC invoice: net NGN 2,000,000 + VAT 7.5% NGN 150,000 = NGN 2,150,000
272- 100% business use (office premises)
273- Return entry: Line 5 (Input VAT) — NGN 150,000
274 
275---
276 
277### Example 4 — Reverse-charge on foreign digital service
278 
279**Scenario:** Company pays for Microsoft Azure (billed from Microsoft Ireland).
280 
281**Bank statement line (First Bank format):**
282```
283Date : 05/04/2025
284Narration : INTL PAYMENT — MICROSOFT IRELAND — AZURE SERVICES APR 2025
285Amount : -NGN 11,200,000.00
286```
287 
288**Working:**
289- Foreign digital service to Nigerian business — self-assess VAT under FIRS guidance
290- Self-assess: NGN 11,200,000 × 7.5/107.5 = NGN 781,395 VAT
291- Declare as output AND claim as input — net zero for fully taxable business
292 
293---
294 
295### Example 5 — Export of software (zero-rated)
296 
297**Scenario:** Nigerian tech company exports software license to UK client.
298 
299**Bank statement line (UBA format):**
300```
301Date : 20/04/2025
302Narration : SWIFT CREDIT — UK TECH LTD — SOFTWARE LICENSE Q1 2025
303Amount : +NGN 15,000,000.00 (USD 9,000)
304```
305 
306**Working:**
307- Export of service to non-resident — zero-rated
308- Requires: contract, foreign bank transfer evidence, NXP form
309- Return entry: Line 3 (Zero-rated) — NGN 15,000,000 | VAT: NGN 0
310 
311---
312 
313### Example 6 — Monthly return summary
314 
315**Scenario:** Manufacturing company — April 2025.
316 
317| Item | Net (NGN) | VAT (NGN) |
318|---|---|---|
319| Domestic taxable sales | 50,000,000 | 3,750,000 |
320| Export sales (0%) | 20,000,000 | 0 |
321| Exempt sales (basic food) | 10,000,000 | 0 |
322| Total Output | 80,000,000 | 3,750,000 |
323| Input on taxable purchases | 30,000,000 | 2,250,000 |
324| **Net VAT payable** | | **1,500,000** |
325 
326---
327 
328## Section 5 — Tier 1 rules (compressed)
329 
330**Rate assignment:**
331- 7.5% standard: all goods and services not specifically exempt or zero-rated
332- 0%: exports of goods and services with proper documentation, diplomatic purchases, goods for humanitarian organisations
333- 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
334 
335**Input credit:**
336- Credit allowed on VAT paid on purchases used for taxable activities
337- Must have valid VAT invoice from VAT-registered supplier (with their VRN)
338- No credit on exempt purchases or purchases unrelated to taxable activities
339- No credit if supplier is below the NGN 25M registration threshold (they should not be charging VAT)
340- Reverse-charge on foreign digital services: output and input net to zero for fully taxable businesses
341 
342**Filing mechanics:**
343- File VAT Form 002 monthly via FIRS TaxPro Max by 21st of following month
344- Also file WHT returns if subject to withholding — separate form
345- Excess input VAT carries forward; FIRS refunds are slow — expect 90+ days
346- Remit VAT collected from customers to FIRS monthly (not annual)
347 
348---
349 
350## Section 6 — Tier 2 catalogue (genuinely data-unknowable items)
351 
352| Item | Why unknowable | What to ask |
353|---|---|---|
354| 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?" |
355| Pharmaceutical exemption | Only NAFDAC-registered medicines exempt | "What is the product? Provide NAFDAC registration number." |
356| Export documentation | Zero-rate requires NXP form, shipping docs | "Provide export documentation — NXP form and freight evidence." |
357| Foreign digital service | B2B (reverse-charge) vs B2C | "Is the Nigerian entity VAT-registered? Does supplier have your TIN?" |
358| Real estate transaction | Land (exempt) vs building services (7.5%) | "Is this land only, or construction/building services?" |
359| Sub-NGN 25M supplier | Should not be charging VAT — no input credit | "Confirm supplier's annual turnover and VAT registration status." |
360 
361---
362 
363## Section 7 — Excel working paper
364 
365**Columns:** Date | Supplier/Customer | VRN | Invoice No. | Net (NGN) | VAT Rate % | VAT (NGN) | In/Out | Zero-rated? | Exempt? | Tier 2 flag | Notes
366 
367**Tab structure:**
3681. `Output_Sales` — all sales by type (taxable/zero-rated/exempt)
3692. `Input_Purchases` — all purchases with VAT credit
3703. `ReverseCharge_Foreign` — foreign services
3714. `VAT_Summary` — monthly Form 002 totals
3725. `Tier2_Items` — awaiting client response
373 
374---
375 
376## Section 8 — Bank statement reading guide
377 
378### GTBank format
379```
380Date : 15/04/2025
381Narration : CREDIT TRANSFER — COMPANY NAME — INV-2025-041 — DESCRIPTION
382Amount : +NGN 5,375,000.00
383Balance : NGN 25,375,000.00
384```
385 
386### Zenith Bank format
387```
38815/04/2025 | TRF FROM ACME CORP | +5,375,000.00 | BAL: 25,375,000.00
389```
390 
391### Key patterns:
392- **NGN number format:** Comma = thousands; period = decimal (NGN 5,375,000.00)
393- **INTL PAYMENT / SWIFT:** Foreign payment — check for export zero-rate or reverse-charge
394- **BILL PAYMENT:** Utility payments — usually include VAT; request invoice
395- **CREDIT TRANSFER:** Domestic wire — match to issued invoice for output VAT
396 
397---
398 
399## Section 9 — Onboarding fallback
400 
401When client cannot provide VAT invoices for all transactions:
402 
4031. Use bank statement amounts as VAT-inclusive totals and back-calculate:
404 - Net = Total ÷ 1.075 | VAT = Total − Net
4052. Apply conservative defaults: 7.5% output on all unverified taxable sales; 0% input credit without valid VRN invoice
4063. Flag all items without VRN invoices in Tier2_Items tab
4074. Issue data request listing missing invoice references
4085. Warn client: FIRS can disallow input credit claims without valid VAT invoices from registered suppliers
409 
410---
411 
412## Section 10 — Reference material
413 
414| Resource | Reference |
415|---|---|
416| FIRS TaxPro Max (filing portal) | https://taxpromax.firs.gov.ng |
417| FIRS main portal | https://www.firs.gov.ng |
418| VAT Act (as amended by Finance Act 2019/2020) | FIRS website — legislation |
419| Finance Act 2020 — VAT rate increase to 7.5% | Official Gazette |
420| VAT registration threshold guidance | FIRS circular 2020 |
421| FIRS e-Invoice pilot | FIRS announcements — 2024 |
422 

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Use this skill whenever asked to prepare, review, or classify transactions for a Nigeria VAT return or advise on Nigerian VAT registration, filing, and compliance. Trigger on phrases like "prepare Nigeria VAT return", "Nigerian VAT", "FIRS VAT", "Form 002", or any Nigeria VAT request. ALWAYS read this skill before touching any Nigeria VAT work.

NGty-2025

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