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Digital services
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Digital services
VAT Standard rate
As of April 2025, Nigeria's standard VAT rate remains at 7.5%.Reduced and Exemption
Nigeria's VAT system does not currently have multiple VAT rates. However, essential items such as food, education, and healthcare services are exempt from VAT. VAT Standard Rate
The standard VAT rate in Nigeria is 7.5%.
VAT Standard rate
7,5%
VAT Reduced rate
-
Thresholds
-
Thresholds
All businesses engaged in taxable activities, foreign or local, are required to register for VAT, regardless of turnover. Even one sale needs a registration.Simplified Compliance Regime
The FIRS has introduced a Simplified Compliance Regime to ease VAT compliance for non-resident suppliers. This regime allows for streamlined registration, filing, and payment processes, particularly for suppliers operating through digital platforms.Tax representative
In Nigeria, non-resident digital service providers are not strictly required to appoint a local tax representative for VAT registration and compliance. They can register directly with the Federal Inland Revenue Service (FIRS) and fulfill their VAT obligations independently.Registration Procedure
To register for VAT in Nigeria, businesses must complete the VAT registration form and submit it to the Federal Inland Revenue Service (FIRS) along with the Certificate of Incorporation, Taxpayer Identification Number (TIN), Memorandum and Articles of Association and utility bill or tenancy agreement for business premises (if applicable).For non-residents, ensure the Nigerian address is included for correspondence.VAT Filing and Payment Date
VAT returns are filed monthly, and payments are due by the 21st day of the month following the reporting period. Returns and payments are submitted to the FIRS.Penalties
Failure to register for VAT, file returns, or pay VAT on time can result in penalties, including:- A fine of ₦50,000 for the first month of default and ₦25,000 for each subsequent month.
- Interest on unpaid tax at the prevailing Central Bank of Nigeria (CBN) rate.
- Additional penalties as determined by the FIRS.
VAT Registration Threshold
- Domestic Businesses: Businesses must register for VAT before providing their first taxable supply.
- Non-Resident Digital Service Providers: Foreign businesses offering digital services to Nigerian consumers must register for VAT if their annual sales exceed NGN 25,000,000.
Types of E-Services Subject to VAT
- Streaming or downloading digital content (e.g., movies, music, e-books, magazines, news, applications, games)
- Online gaming
- Online ticketing (excluding international air travel and freight charges)
- Online betting services
- Online intermediation platform services (e.g., online marketplaces, payment platforms, ride-hailing, travel and accommodation booking, rental services)
- Online advertising services
- Subscription-based social media platforms (e.g., video conferencing applications, instant messaging, chat, dating, image/video sharing)
- Standardized online education services (e.g., e-learning, webinars)
- Cloud computing services (e.g., cloud storage)
- Auction services
- Automated online professional and consultancy services
- Online stores
- E-libraries
Registration Procedure
To register for VAT, businesses must complete Form 001 with the Federal Inland Revenue Service (FIRS). Applicants must provide an incorporation number or personal ID if not incorporated. Upon registration, a unique 10-digit VAT identification number is issued, which must be used on invoices and when submitting VAT returns.VAT Filing and Payment
VAT returns must be filed monthly and are due by the 20th day of the month following the tax period. Payments should be made in Nigerian Naira (NGN).Penalties
Failure to register, file VAT returns, or pay VAT on time may result in fines and interest charges, suspension of import/export privileges, additional penalties as determined by the FIRS.- Failure to register: NGN 10,000 for the first month and NGN 5,000 for each subsequent month.
- Failure to Issue Tax Invoices: A penalty of 50% of the invoice amount.
- Failure to file returns: NGN 5,000 for each month of default.
Record-Keeping
Accounting records must be maintained for at least six years after the end of the reporting year. Records should include invoices, receipts, bank statements, and contracts, supporting the financial transactions recorded in the company's accounts. Proper record-keeping is essential for ensuring compliance with tax regulations and facilitating audits by the FIRS.
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