Overview
The rapid growth of the global digital economy has fundamentally changed how goods and services are delivered, consumed, and taxed. In Nigeria, this shift triggered major legislative reforms beginning in 2020, and was further strengthened by the recent enactment of comprehensive tax reform acts.
Nigeria has reshaped its tax landscape by introducing four key laws: the Nigerian Tax Act, the Nigerian Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board of Nigeria (Establishment) Act. These laws impose VAT obligations directly on Non-Resident Taxable Suppliers (NRTSs). As digital transactions continue to dominate cross-border commerce, it is crucial for multinational suppliers and the tax authorities responsible for administering these rules to clearly understand these obligations.
A NRTS is required to register for VAT if it provides taxable goods and services to Nigerian customers (B2C and B2B). This registration obligates the NRTS to include VAT on its invoices and file monthly VAT returns. The standard VAT rate is fixed at 7.5% for all qualifying goods and services, except those specified as zero-rated in the VAT Act.
The relevant law that addresses the VAT compliance requirements of Nigeria Revenue Service (NRS) in Nigeria is Section 150 of the Nigeria Tax Act (NTA). Based on Section 150(7) of the NTA, “The Service may issue a guideline for the purpose of giving effect to the provisions of this section, including the form, time and procedure for filing returns and payment by non-resident suppliers appointed by the Service”. This provision is similar to Section 10(6) of the repealed Value Added Tax (VAT) Act. Accordingly, the NRS issued a circular on Simplified Compliance Regime for Value Added Tax (“the circular”), designed specifically for NRTS.
The circular, which took effect on 1 January 2022, was issued pursuant to Section 10 of the VAT Act. Although it predates the NTA, it remains relevant pending the issuance of an updated circular reflecting the provisions of Section 198(b) of the NTA. The circular requires a Non-Resident Taxable Supplier (NRTS) that supplies goods, services, intangibles, or other digital products to customers in Nigeria through digital means to register for VAT, obtain a Tax Identification Number (TIN), charge VAT on invoices issued to Nigerian customers, and remit the collected VAT to the Nigeria Revenue Service (NRS).
All NRTSs are appointed VAT agents and are responsible for collecting VAT from their Nigerian customers and remitting it to NRS before the 21st day of the following month. The VAT payment is made in the currency of the transaction.
Generally, a NRTS must register for VAT with NRS if its annual supplies are expected to reach the minimum threshold of $25,000 (or its equivalent in other currencies). If the NRTS does not meet this threshold for three consecutive years, they can request for deregistration for VAT purposes. However, if the threshold is subsequently met, the earlier registration can be reactivated.
Key provisions applicable to VAT on ESS
| Particulars | Description |
| Scope | Non-residents supplying electronic services to Nigerian consumers (“B2C”) or businesses (“B2B”) |
| Liability to remit VAT | NRTS has the primary obligation to remit the VAT to the NRS where digital services are supplied via electronic means. The Nigerian customer in a B2B transaction will be required to self-charge VAT where the NRTS fails to add VAT to its invoice and remit the same to the NRS. For a B2C transaction, accounting for VAT may be difficult if the NRTS did not charge VAT on its invoice. Accordingly, a NRTS that makes a taxable supply to Nigeria may designate a representative for the purpose of compliance with its tax obligations. |
| VAT rate | 7.5% |
| Taxable value | VAT is applicable on the value of the taxable supply. |
| Effective date | 1 January 2022 |
| VAT registration threshold | Total annual supplies of at least $25,000 (or its equivalent in other currencies) |
| Tax invoice | The NRTS is required to issue a tax invoice. |
Services in scope
Based on the NRS circular, the following services are covered by the scope:
- Streaming, downloading or access to digital content including movies, music, e-books, magazines, news, applications, games, library services or like services
- Online gaming
- Online ticketing excluding international air travels and freight charges.
- Online betting services
- Online intermediation platform services, including online marketplaces, payment platforms, ride hailing, travel and accommodation booking, rental services or like services
- Online advertising services
- Subscription based social media platforms including video conferencing applications, instant messaging, chat, dating, image/video sharing or like services
- Standardised online education services such as e-learning, webinars or similar services
- Cloud computing services including cloud storage services
- Auction services
- Automated online professional and consultancy services
- Online stores
- E-library
Registration and compliance
The requirement for a NRTS to register for VAT in Nigeria is that its total supplies to Nigerian customers within a 12-month period meet or exceed the $25,000 (or its equivalent in other currencies) threshold. Successful registration results in the issuance of a Tax Identification Number (TIN). A NRTS that meets the VAT registration threshold is required to maintain relevant transaction records and issue electronic tax invoices to its Nigerian customers.
NRTSs are responsible for collecting VAT on their invoices and remitting it to the NRS before the 21st day of the following month. Where the NRTS fails to charge and collect VAT on taxable supplies to Nigerian customers, the responsibility to self-charge and remit the VAT falls on the customer.
VAT on costs
Under Section 155(4) of the NTA, a NRTS is allowed to claim input VAT on services and fixed assets utilised for the purpose of making taxable supplies in Nigeria.
This means that:
- Input VAT incurred in a given month is offset against the output VAT collected in that same month.
- Only the net VAT (i.e., output VAT minus allowable input VAT) is remitted to the NRS.
This approach aligns with global VAT principles, ensuring that VAT functions as a consumption tax rather than a cost to the supplier.
Where the input VAT incurred by a NRTS in a particular month exceeds the output VAT collected, the legislation provides two options:
- Carry-Forward of VAT Credit: The NRTS may carry forward the excess input VAT as a credit to offset subsequent months’ VAT liabilities. This mechanism helps smooth cash flow and avoids unnecessary administrative steps.
- Claiming a VAT Refund: Alternatively, the NRTS may elect to claim a refund instead of carrying the excess forward.
The VAT Act specifies the following conditions and timelines:
- The NRS is mandated to process and grant the refund within 30 days of receiving a valid refund request.
- If the NRS does not issue the refund within this statutory timeframe, the NRTS is permitted to apply the refundable amount against other tax obligations, including income tax liabilities.
- Refund requests must be submitted within 12 months of the transaction giving rise to the excess input VAT. Any request for a refund made outside this timeframe will not be considered.
Electronic Invoicing
NRTSs may be required to issue electronic tax invoices for their taxable supplies in Nigeria. At a minimum, each invoice should include the following information:
- Name and Tax Identification Number (TIN) of the NRTS
- Description of the supply
- Date of the supply
- Value of the supply
- VAT charged
The e-invoicing framework applies broadly to all taxpayers making taxable supplies in Nigeria, including both resident and non-resident entities. The NRS introduced this framework to implement a real-time, technology -driven system that strengthens transaction monitoring, enhances transparency, and improves VAT compliance.
Notwithstanding the above, practical uncertainty remains regarding how NRTSs are expected to comply with the e-invoicing regime. Although the legal and policy framework suggests that non-resident suppliers fall within scope, the NRS is yet to clearly define the operational requirements applicable to such entities.
As of February 2026, the NRS has limited the mandatory e-invoicing requirement to Large Taxpayers, being entities with an annual turnover of ₦5 billion (circa USD 3.6m) and above. The NRS has not expressly excluded the NRTSs from this category. Accordingly, such entities may technically fall within scope.
In light of this uncertainty, NRTSs should proactively prepare for potential implementation. This approach positions them for operational readiness if the NRS confirms that non-resident entities fall within scope and proceed with enforcement.
We recommend that NRTSs formally engage with the NRS to obtain written confirmation that, in its capacity as a non-resident service provider, it is not currently required to comply with the e-invoicing mandate and that no penalties will arise from any non-compliance during this period.
Other considerations
NRTS that operate intermediary platforms are required to fulfil VAT registration, invoicing, and filing requirements in respect of sales completed through their platforms, as if they were the actual suppliers. Such platform owners are also required to maintain relevant records of transactions with Nigerian customers completed through their platforms.
NRTS are allowed to appoint a representative to act on its behalf in carrying out some of their administrative responsibilities in Nigeria. However, the NRTS are still required to register for VAT in its name and has the ultimate responsibility for its obligations under the Act.
NRTS resident in non-treaty countries are liable to Companies Income Tax (CIT) on income sourced from Nigeria. They are required to file income tax returns no later than six months after the end of its accounting year (e.g., by 30 June if the year ends on 31 December). Failure to file attracts a penalty of NGN 100,000 for the first month of default and NGN 50,000 for each subsequent month. In addition, unpaid taxes attract a 10% flat penalty and interest at prevailing Central Bank of Nigeria (CBN) monetary policy rate plus a spread to be determined by the Ministry of Finance.
VAT on cryptocurrency/digital assets
Currently, Nigeria does not have specific VAT rules or regulations relating to cryptocurrency-related activities or digital assets.
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