Nigeria Vat

Nigeria VAT (Value Added Tax) Skill v2.0

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

Section 1 — Quick reference

Key VAT Form 002 lines

Conservative defaults

Red flag thresholds

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

3.2 Electricity and utilities

3.3 Telecommunications

3.4 Transport and travel

3.5 Logistics and courier

3.6 Retail and office supplies

3.7 Software and digital services

3.8 Professional services

3.9 Insurance

3.10 Basic foodstuffs and exempt goods

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.

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)

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

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.

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