Nigeria: VAT-able Goods, Services and Exemptions.

 

Goods on which VAT is Applicable

Locally Supplied Goods: VAT is chargeable on the supply on goods and services in Nigeria, except goods and services that are specifically exempted.

Imported Goods: VAT will be charged on non-exempted imported goods into Nigeria irrespective of whether or not:-

·     the goods have to attract customs duties; and

·     the person importing the goods is registered for VAT

The VAT chargeable is in addition to customs duties and other charges that may be done. The value of such imported goods includes all the duties and charges that may be made.

Imported Service: VAT is payable on services received from outside Nigeria if such services are supplied to a Nigerian customer.

Goods Exempted

(a) Medical and pharmaceutical products;

(b) Basic food items;

(c) Books and educational materials;

(d) Newspapers and magazines

(e) Baby products;

(f) Locally produced Agricultural equipment and products and veterinary medicine;

(g) Fertilizer

(h) Locally manufactured Sanitary towels.

(i) Plants, Machinery and equipment purchased for the utilization of gas in downstream operation

(j). Exported Goods: All exported goods are zero-rated, that is, such goods are VAT-able but at zero percent. This means that no VAT is collected from the foreign buyer and at the same time any input tax is refundable.

 Services Exempted

(a) Medical Services;

(b) Services rendered by Community Banks, Peoples Banks and Mortgage Institutions; and

(c) Plays and performances conducted by educational institutions as part of learning.

Points to Note

·     VAT is a tax on spending. The tax is borne by the final consumer of goods and services because it is included in the price paid.

·     The tax is at a flat rate of 5%.

·     The tax is collected on behalf of the Government by businesses and organizations which have registered with the Federal Inland Revenue Services (FIRS) for VAT purposes,

·     A business or organization which has registered for VAT is classified as a “registered person”. Such persons will pay 7.5% VAT on goods and services purchases but can claim credit for this tax (called input tax) when sold.

·     7.5% VAT (called output tax) is included in the price of all goods and services supplied by registered persons.

·     The registered person has to make regular VAT returns and either pays to, or receives from the FIRS, the difference of the input tax and the output tax.

·     VAT returns (and payments) are normally made monthly to the FIRS on or before 21st day of the month next following that in which the supply was made.

·     To claim a credit for Input VAT, a registered person must hold a “Tax Invoice”.

·     Records and accounts have to be kept to aid VAT administration and as support documents in the event of an audit.

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