International VAT Guides 

Nigeria

VAT rates in Nigeria 

How much is VAT in Nigeria? 

The Nigeria VAT system is an example of the modern VAT regime, structured on one side following international concepts, and on the other side in conformity with most of the developed African jurisdictions. 

The Nigeria Revenue Service is the primary institution responsible for governing tax frameworks and implementing tax legislation, developed in cooperation with other authorities or independently. 

The VAT framework is established primarily under the provisions of the VAT Act, the VAT Regulations, and the VAT Guidelines (including the VAT Guidelines on the Simplified Compliance Regime for Non-Resident Suppliers). 

The Finance Act 2020, which came into force on January 1, 2021, introduced, for the first time, tax provisions that oblige non-resident providers of digital services and/or recipients of these services to collect VAT on cross-border supplies and remit the tax payable to the tax authority.

VAT threshold in Nigeria

The VAT Nigeria Act and Guidelines on Simplified Compliance Regime for Non-Resident Sellers are two main pillars which define the specific requirements and rules for non-resident digital service providers. The rules for VAT threshold in Nigeria for non-resident digital services providers are the same as for the domestic providers of remote services. 

VAT registration threshold for resident businesses: NGN 50.000.000,00

VAT registration threshold for non-resident businesses: USD 25,000

VAT registration threshold for foreign providers of digital services: USD 25,000

VAT Taxable Activities in Nigeria

Types of taxable activities that mandate VAT registration:

• Supply of goods and services for consideration;
• Supply of remote services by non-resident providers
• Supply of consultancy and professional services by non-resident providers
• Exports;
• Imports of goods and services; 
• Supply of warehousing services

Tax Representative in Nigeria 

In most cases, non-resident service providers don’t need the services of a local tax agent for VAT compliance under the Simplified Compliance Regime. 

Tax registration

Non-resident providers of digital services or intermediation platforms should, in most cases, register in Nigeria’s VAT system using the simplified registration procedure. If the non-resident provider surpasses the domestic threshold, the registration is, in most cases,s mandatory by default. 

VAT on Electronically Supplied Services in Nigeria 

Digital Services

Non-resident providers of digital services are, in most cases, required to register for VAT when they exceed the monetary threshold. The threshold is USD 25,000, and is based on turnover over any 12 consecutive months. 

Online vendors or digital platform operators should register only through the simplified vendor registration regime if they provide remote services to local customers. 

When they are registered for VAT, they should collect VAT on both B2C and B2B transactions. There are two situations that demand VAT collection. First case is when the Revenue Authority notifies the non-resident digital service provider as a responsible person for tax collection; and the second case is the usage of the VAT withholding regime, which is demanded in cases of B2B VAT transactions, where local taxable person should withhold(deduct) VAT from the total amount paid to a non-resident taxable person which is not collecting VAT.

How much is VAT in Nigeria for Electronically Supplied Services?

VAT rate in Nigeria for remote services is 7.5%. 

Taxable Digital Services in Nigeria

The following types of digital services are taxable:

• Audio and video streaming services 
• SaaS services
• Intermediation platform services
• Payment facilitation services
• Cloud computing services and storage

Marketplace and Digital Platform Operators’ Rules

The non-resident operator of a digital platform that facilitates the supply of remote services is responsible for collecting VAT on behalf of third-party users registered on the platform. 

Invoicing Rules

Non-resident providers of remote services or digital platform operators should issue an electronic tax invoice for these supplies. The Revenue Service permits non-resident suppliers to issue tax invoices in accordance with the domestic legislation (country of residence), provided the taxable person is VAT-compliant, and the invoice includes all mandatory lines.  The invoice must contain at least the following information: 

The pdf invoice should at least contain the following:

• Name and the TIN of the Supplier
• Description of supply
• Date of supply
• Value of supply, and
• VAT charged.

Foreign Currency Invoice in Nigeria  

In most cases, issuing an invoice in a foreign currency is permitted. Simplified VAT returns and tax remittances can also be made in a foreign currency. 

VAT Returns in Nigeria

Simplified Return

Non-resident providers of remote services should register under the simplified vendor registration regime. They should also submit a simplified VAT return, following the VAT return template prepared exclusively for this category of vendors. 

A simplified VAT return doesn’t allow foreign providers of digital services to claim input tax credits. They could potentially claim input tax credits, only in cases where their national VAT law permits this under the export of services regime. 

Simplified VAT Return

Penalties for late reporting and omitted declarations 

Penalties for VAT Non-Compliance:

Late Registration(general VAT regime): A taxable person who fails to register within the prescribed time is liable to pay a penalty:

(a) NGN 50,000 in the first month in which the failure occurs; and

(b) NGN 25,000 for each subsequent month in which the failure continues

Late Remittance: Ten percent penalty for not remitting tax and interest

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