VALUE ADDED TAX ACT
Act · Finance
Policy date: 2019-01-01
An Act imposes Value Added Tax on goods and services in Nigeria at a rate of 7.5 percent. It targets businesses with annual turnover above N25 million and consumers of taxable items.
VALUE ADDED TAX ACT
What Is This Policy?
The principal legislation imposing Value Added Tax (VAT) on the supply of goods and services in Nigeria, currently at a rate of 7.5%, collected from consumers through the supply chain and remitted to FIRS.
Who Does It Target?
All businesses with annual taxable turnover above N25 million Consumers purchasing VAT-able goods and services FIRS as the collecting authority Tax practitioners advising on VAT compliance
What Does It Aim to Achieve?
Raise government revenue through a broad-based consumption tax, shift the tax burden towards consumption rather than income, and fund government services.
Key Features
Tax Rate: VAT is currently 7.5% (increased from 5% by Finance Act 2019) on all taxable supplies. Registration: Businesses with turnover above N25 million must register for VAT with FIRS. Exempt Supplies: Certain goods and services are VAT-exempt including basic food items, medical goods, and educational materials. Input Credit: Registered businesses may claim credit for VAT paid on their business inputs.
Current Status
Rollout Stage: Active — FIRS enforces VAT compliance nationwide Coverage: Nationwide consumption tax Beneficiaries: Government revenue; public services funding Funding: Revenue measure
How to Access
Register for VAT with FIRS if annual turnover exceeds N25 million File monthly VAT returns by the 21st of the following month Issue VAT invoices to customers for all taxable supplies Application method: VAT registration and filing at https://www.firs.gov.ng
Important Terms
Small businesses below N25 million are VAT-exempt but may voluntarily register VAT collected belongs to the government — failure to remit is theft of government funds FIRS may assess VAT on businesses found to be collecting but not remitting
Impact & Metrics
VAT is Nigeria's second largest tax revenue source after Companies Income Tax, contributing trillions of naira annually.
Official Resources
Website: https://www.firs.gov.ng Contact: Federal Inland Revenue Service (FIRS)
Legal Framework
Enacted under the legislative powers of the National Assembly vested by Section 4 of the 1999 Constitution (as amended). The Value Added Tax Act (Cap V1 LFN 2004) as amended by successive Finance Acts is the principal statute, with the current rate of 7.5% set by the Finance Act 2019. Administered by the Federal Inland Revenue Service (FIRS) Act. Aligns with ECOWAS tax harmonisation guidelines and IMF technical assistance on VAT administration.