Nigeria’s value added tax is 7.5%, charged on the price before tax. It is a federal tax, collected by the NRS, the Nigeria Revenue Service, and governed since 2026 by the Nigeria Tax Act 2025.
One rate, and nothing stacked on it
Some countries charge levies alongside VAT, so the rate on the receipt is not the rate you pay. Nigeria does not. 7.5% of the price before tax is the whole of it.
The rate is charged on the price before tax. So VAT is not 7.5% of a total that already includes it: to find the price before tax, divide the total by 1.075.
What carries no VAT
The Act takes a list of supplies out of VAT altogether. Among them:
- basic food - the staples, unprocessed or lightly processed
- medicines and medical services
- educational books and materials, and tuition
- rent on residential property
That is why a supermarket receipt often shows VAT on some lines and not on others. Restaurant meals, drinks, electronics, phone airtime and most services carry it.
Note
Lagos also charges its own consumption tax on hotel rooms and on food and drink sold in restaurants and event centres, under a state law. It is not VAT, it is not collected by the NRS, and a restaurant bill can carry both.
Who has to charge it
A business with annual turnover of ₦100,000,000 or less counts as a small company under the Act and need not charge VAT. Above that, it registers with the NRS, charges VAT on what it sells, files a return every month, and pays over what it collected less the VAT it paid on its own business purchases.
That last part is what makes VAT a tax on the final customer rather than on every business along the way. A business that keeps no record of the VAT it paid loses the right to deduct it.
Reading an invoice
A supplier who charges you VAT should show it as its own line, with their tax identification number on the invoice. If a bill just says “plus VAT” and the supplier cannot give you either, ask. You may be paying a tax that is not being paid over.
If you freelance
VAT goes on your invoice; withholding tax comes off what your client pays you, worked out on the fee before VAT. The two are easy to confuse and have nothing to do with each other.