VAT in 2026: Same 7.5% Rate, Very Different Rules

The VAT rate did not change under the Nigeria Tax Act, 2025 — it remains 7.5%. But the mechanics did, and most of the changes favour businesses that keep good records.

Input VAT on services and assets

Under the old law, VAT paid on services and on fixed assets could not be recovered. Now, input VAT on any taxable supply — including services and fixed assets — can be offset against output VAT, to the extent it relates to taxable supplies. Where costs serve both taxable and exempt activities, input VAT must be apportioned. Claims must be made within five years.

Zero-rated and exempt supplies

Several essentials — including basic food items, medical and pharmaceutical products, educational materials and tuition, and electricity generation and transmission — are treated as zero-rated rather than simply exempt. That matters: suppliers of zero-rated goods can recover their input VAT, which should ease cost pressure on these sectors. Check the specific items you supply against the schedules in the Act, as commentators differ on the exact lists.

Filing and compliance

• VAT returns are due by the 21st day of the following month.
• Small businesses below the small company thresholds are exempt from charging VAT.
• All taxable supplies must be recorded and reported through the NRS Electronic Fiscal System (see our e-invoicing guide).

What to change

• Update your chart of accounts to capture input VAT on services and assets.
• Set up apportionment for mixed taxable/exempt activities.
• Review supplier invoices — you can only claim VAT on valid invoices.
• Reassess pricing if you supply newly zero-rated goods.