How VAT Works in Nigeria: A Small-Business Guide

What VAT is, in one minute

Value Added Tax (VAT) is a tax added to the price of most goods and services in Nigeria. As a business, you don't ultimately pay it — your customers do. Your job is to collect it on the government's behalf and pass it on to the tax authority.

The current standard VAT rate in Nigeria is 7.5%. So if you sell an item for NGN 10,000 and it is a taxable supply, you charge the customer NGN 10,750 — the extra NGN 750 is VAT you are holding to remit.

Some supplies are zero-rated or exempt (for example, certain basic food items, medical and pharmaceutical products, and educational materials). Because these lists change, treat any specific item as something to confirm rather than assume.

Who has to register for VAT

This is the part that matters most for small businesses. Nigeria sets a turnover threshold: businesses with annual turnover below NGN 100,000,000 are treated as small companies and are exempt — they do not have to register for, charge, or file VAT.

Once your turnover reaches or crosses NGN 100,000,000 in a year, you are expected to register with the Nigeria Revenue Service (NRS, formerly FIRS), charge VAT on taxable sales, and file returns. Registration is tied to your Tax Identification Number (TIN).

• Below NGN 100,000,000 turnover: generally exempt — no VAT registration or monthly return required.
• At or above NGN 100,000,000 turnover: register with the NRS, charge 7.5% VAT, and file monthly.
• Your TIN is the identifier that links your business to VAT and other taxes.
• Even if you are exempt, keeping clean sales records makes it painless to switch on VAT the moment you cross the line.

Input VAT vs output VAT

If you are registered, you deal with two sides of VAT. Output VAT is the 7.5% you charge customers on your sales. Input VAT is the VAT you were charged by your own suppliers on business purchases.

In simple terms, you remit the difference: output VAT collected minus allowable input VAT. If you collected NGN 300,000 in VAT from customers and paid NGN 110,000 in VAT on qualifying purchases, you generally remit NGN 190,000. Not every purchase qualifies for input VAT recovery, so keep every supplier invoice that shows VAT charged.

The monthly VAT return

Unlike some countries that file quarterly, Nigeria uses a monthly VAT return. Registered businesses report the VAT they charged and paid for each calendar month and remit what is due.

The deadline is the 21st day of the month following the period. So VAT for July is due by 21 August. You file even in a month where you made no taxable sales — a nil return still has to go in. Late filing and late payment attract penalties and interest, so it pays to keep this on a fixed monthly routine.

1. 1

   Total your sales VAT

   Add up the 7.5% output VAT you charged customers during the month.

2. 2

   Total your purchase VAT

   Add up the allowable input VAT from supplier invoices for the same month.

3. 3

   Work out what you owe

   Subtract input VAT from output VAT to find the amount to remit (or carry forward if input exceeds output).

4. 4

   File and pay by the 21st

   Submit the monthly VAT return to the NRS and pay the balance by the 21st of the following month, including nil returns.

E-invoicing: the National E-Invoicing Solution

Nigeria is modernising how invoices are reported through the National E-Invoicing Solution. The direction of travel is that invoices are generated in a standard digital format and shared with the tax authority so that sales data is captured closer to real time.

Roll-out has started with larger taxpayers and is expanding in phases, so many genuinely small businesses are not yet in scope. Even so, it is worth getting your invoicing tidy now: consistent invoice numbering, correct customer details, clear VAT amounts, and your TIN on every document. That way, when e-invoicing reaches your business, the switch is a settings change rather than a scramble.

Because the phases and thresholds are being updated as the programme grows, check where your business currently stands before assuming you are in or out.

How Tallium keeps VAT painless

Tallium is an all-in-one accounting, POS, inventory and e-commerce platform built for small and medium businesses. Every plan includes the full core: accounting, VAT handling, expense and receipt scanning, reports, a mobile app, AI insights and email support.

For VAT specifically, Tallium applies the 7.5% rate on the right sales automatically, separates output and input VAT as you go, and pulls your monthly figures together so filing your return is a review-and-submit job instead of a spreadsheet marathon. Invoices carry your TIN and clean, consistent formatting, which keeps you ready as the National E-Invoicing Solution expands.

Pricing is simple and in US dollars, billed monthly from signup with no free trial and cancel anytime: a shop or store is $79/month, an online store is $159/month, a warehouse is $99/month, and a factory is $269/month — each per unit. Questions? Email support@tallium.online.

A quick note on staying compliant

This article is general information, not tax advice. VAT rates, thresholds, deadlines and e-invoicing timelines do change, and the details of your situation matter. Before you register, file, or decide you're exempt, confirm the current rules with the Nigeria Revenue Service (NRS) or a qualified local tax professional.

The habits that protect you are the same either way: record every sale and purchase, keep VAT-bearing invoices, and set a recurring reminder for the 21st. Good software makes those habits automatic.