Nigeria

Overview

Following the amendments to the Value Added Tax Act by the Finance Act 2020 and 2023, non-resident suppliers (NRSs) making taxable supplies of goods and services to Nigeria now have VAT compliance obligations.

A NRS is now required to register for VAT if it provides taxable goods and services to Nigerian customers (B2C and B2B). This registration obligates the NRS 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 outlines the VAT compliance requirements of NRSs in Nigeria is Section 10 of the VAT Act. Based on Section 10(6) of the VAT Act:
“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.”

Accordingly, the Federal Inland Revenue Service (FIRS) issued an Information Circular, Guidelines on Simplified Compliance Regime for Value Added Tax (VAT) for Non-Resident Suppliers (the Circular), designed specifically for NRSs.

The Circular, which was effective from 1 January 2022, is based on Section 10 of the VAT Act, which requires a NRS to register for VAT, obtain a Tax Identification Number (TIN) and include VAT on its invoice to customers in Nigeria. It also empowers the FIRS to appoint taxpayers to collect and remit VAT on its behalf.

As VAT agents, the appointed NRSs are responsible for collecting VAT from their Nigerian customers and remitting it to FIRS before the 14th day of the following month. The VAT payment is made in the currency of the transaction.

Generally, a NRS must register for VAT with FIRS if its annual supplies are expected to reach the minimum threshold of $25,000 (or its equivalent in other currencies). If the NRS does not meet this threshold for three consecutive years, they can request deregistration for VAT purposes. However, if the threshold is subsequently met, the earlier registration can be reactivated.

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Key provisions based on the FIRS Circular
Services in scope
Registration and compliance
Invoicing
VAT on costs
Other considerations

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Release date: April 2024

Key provisions based on the FIRS Circular

Table 1

Services in scope

Based on the FIRS Circular, the following services are covered by the scope:

Streaming, downloading or accessing digital content, including movies, music, e-books, magazines, news, applications, games, library services or like services
Online gaming
Online ticketing, excluding international air travel and freight charges
Online betting services
Online intermediation platform services, including online marketplaces, payment platforms, ridehailing, 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-libraries

Registration and compliance

The requirement for a NRS 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 issuing of a tax identification number (TIN). A NRS that meets the VAT registration threshold is required to maintain relevant transaction records and issue electronic tax invoices to its Nigerian customers.

Where a NRS is a FIRS-appointed VAT agent, the NRS becomes responsible for collecting VAT on their invoices and remitting it to the FIRS before the 14th day of the following month. Failure to charge and collect VAT on taxable supplies to Nigerian customers places the responsibility on the customer to self-charge the VAT and remit it to the FIRS before the 21st day of the following month.

If the NRS is not a FIRS-appointed agent, the Nigerian customer is required to withhold the VAT on the invoice and remit it to the FIRS before the 21st day of the following month.

Invoicing

NRSs are mandated to issue an electronic tax invoice for their taxable supplies in Nigeria, which must include the following basic information:

Name and the TIN of the NRS
Description of supply
Date of supply
Value of supply
VAT charged

VAT on costs

In Nigeria, input VAT is not claimable on services purchased by residents and non-resident suppliers. The VAT Act does not allow NRSs to recover any input tax paid from the VAT collected. The input VAT incurred by NRSs is an additional cost to the business.

Other considerations

NRSs that operate intermediary platforms are required to fulfil VAT registration, invoicing and filing requirements regarding 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.

NRSs can appoint a representative to act on their behalf in carrying out some of their administrative responsibilities in Nigeria. However, a NRS is still required to register for VAT in its name and has the ultimate responsibility for its obligations under the Act.

Particulars	Description
Scope	Non-residents supplying electronic services to Nigerian consumers (“B2C”) or businesses (“B2B”)
Liability to remit VAT	An NRS has the primary obligation to remit the VAT to the FIRS where digital services are supplied via electronic means. The Nigerian customer in a B2B transaction will be required to self-charge VAT where the NRS fails to add VAT to its invoice and remit the same to the FIRS. For a B2C transaction, accounting for VAT may be difficult if the NRS did not charge VAT on its invoice. An NRS 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	NRSs are required to issue a tax invoice.

Download publication (pdf - 4.20mb) VAT in Africa Digital Services

This report is a special edition of our annual VAT Guide in Africa, focusing on new rules and measures that have been introduced to tax the digital economy unilaterally by countries in Africa.

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