Nigerian tax15 Aug 2026 · 4 min read

How to calculate VAT on your invoices in Nigeria

To calculate VAT on your invoice, take the price of your goods or service and multiply it by 7.5%. That amount goes on top of your price and is what your…

VAT is the thin layer added on top of your price - collected from customers, but it always passes straight through to government, never becoming part of your profit.

To calculate VAT on your invoice, take the price of your goods or service and multiply it by 7.5%. That amount goes on top of your price and is what your customer pays you in addition. If your invoice is for ₦200,000, VAT is ₦15,000, and your customer pays ₦215,000 in total.

What VAT actually is and who charges it

VAT is a consumption tax at a flat rate of 7.5% on most goods and services in Nigeria. If you run a business selling taxable goods or services, you charge VAT on top of your price and collect it from your customer on behalf of government. You do not absorb it yourself, it is not part of your profit, and it should never be quietly folded into your price without being shown.

Some goods and services are zero rated or exempt under the VAT Act. Basic food items, medical and pharmaceutical products, exported goods, educational materials and services, and baby products fall outside VAT. If you are not sure whether what you sell qualifies, it is worth checking the schedule to the VAT Act before you assume every invoice needs VAT added.

Before you can charge VAT: registration

You cannot legally charge or remit VAT without a Tax ID. If you are starting a business or have never confirmed your registration, use the free Tax ID lookup to check whether you already have one before you assume you need to register from scratch. Registration is a one-time step, but it has to happen before your first VAT-inclusive invoice goes out, not after.

Worked example: calculating VAT on an invoice

Say you run a small design agency and you have just finished a job worth ₦450,000.

Item	Amount
Price of service	₦450,000
VAT (7.5%)	₦33,750
Total invoice to customer	₦483,750

The working is simple: ₦450,000 × 0.075 = ₦33,750. Add that to your original price and you get the total your customer owes you.

If you are working backward from a total that already includes VAT, say a customer paid ₦483,750 and you need to know how much of that was VAT, divide by 1.075 to get the original price (₦450,000), then subtract to find the VAT portion. Doing this by hand for several invoices a month gets tedious, so it is faster to run the numbers through the free tax calculator instead of recalculating manually each time.

When you must charge VAT and when you do not

You charge VAT if you are supplying taxable goods or services in Nigeria, regardless of the size of your business. There is no small business exemption from charging VAT itself. This is different from company income tax, where a small company (turnover of ₦100,000,000 or less and fixed assets of ₦250,000,000 or less) is exempt from company income tax and the development levy, but must still file returns. VAT does not follow that exemption. If you sell something taxable, you charge VAT no matter your turnover.

How to remit VAT once you have collected it

VAT you collect from customers is not your money. You are holding it for government until you remit it. The deadline for VAT remittance is the 21st of the month following the one in which you made the sale. So VAT collected in March is due by 21 April.

To remit, you total up the VAT you charged across all your invoices for the month, subtract any VAT you paid on business purchases (input VAT), and pay the difference. If you charged ₦120,000 in VAT to your customers in a month and paid ₦40,000 in VAT on supplies you bought for the business, you remit ₦80,000, not the full ₦120,000.

Step	Amount
Output VAT (charged to customers)	₦120,000
Input VAT (paid on business purchases)	₦40,000
VAT due to government	₦80,000

Common mistakes small business owners make

Beyond the basics already covered above, a few less obvious mistakes come up often.

Mistake	Why it causes a problem
Claiming input VAT on non-business purchases	This overstates your deduction and creates a mismatch if your filing is ever queried
Charging VAT on zero-rated or exempt items	You collect money you should not have, and refunding a customer afterward is harder than not charging it in the first place
Filing VAT returns as nil when you had no sales, then skipping the next month too	Even a nil month needs a return filed, since the obligation to file does not pause with the obligation to pay

Skipping the basics, like registering early, makes every deadline harder to meet.

What comes after VAT: your other filing dates

VAT is a monthly obligation, but it sits alongside other deadlines you should keep in view. If you run a company, your company income tax return is due six months from your financial year end. If you also employ staff, PAYE remittance is due by the 10th of each month, with the annual PAYE return due by 31 January. If you are filing as an individual on top of running the business, your personal return is due by 31 March.

The free eight part course walks through VAT, PAYE, and company filing obligations in the order you will actually meet them as a business owner. When your VAT is due this month, go straight to start a return rather than leave it until the 21st creeps up on you.

See what you actually owe

Preparing your return costs nothing, all the way to the finished document. You pay only if you want us to file it.

Start free