How much is VAT now in Nigeria?
What is VAT threshold in Nigeria?
The VAT registration threshold is nil; businesses must therefore register before providing their first taxable sale of goods or services. Failing to register will incur a fine of NGN 10,000 for the first month; and then NGN 5000 for any subsequent months.
How does VAT work in Nigeria?
Value Added Tax (VAT) is a tax imposed on the supply of goods and services. Under Nigerian law, the tax is charged at 7.5% of the value of the taxable goods and services.
What is the new VAT law?
From 1 March 2021, new ‘reverse charge VAT accounting’ rules apply to all qualifying supplies made on or after that date. This means that: Suppliers of goods or services are no longer be involved in the payment of VAT to HMRC. The liability for VAT payment is now be with the VAT registered customer.
How is VAT calculated?
Take the gross amount of any sum (items you sell or buy) – that is, the total including any VAT – and divide it by 117.5, if the VAT rate is 17.5 per cent. (If the rate is different, add 100 to the VAT percentage rate and divide by that number.)
Is VAT chargeable on rent in Nigeria?
For VAT to be chargeable, the transaction must qualify as a supply of goods or service. Rent derived from lease of real properties, whether for residential or commercial purposes, is not a supply of goods or services and is therefore not liable to VAT.
What services are VAT exempt in Nigeria?
- Medical services;
- Services rendered by Microfinance Banks, People’s Banks, and Mortgage Institutions;
- Plays and performances conducted by educational institutions as part of learning; and.
- All exported services.
- Tuition relating to the nursery, primary, secondary and tertiary education.
Is VAT charged on services in Nigeria?
By section 7 of the VAT Act, the Federal Inland Revenue Service (FIRS) is the body charged with the administration, management and collection of VAT in Nigeria. The current rate of VAT in Nigeria is 7.5 percent of the total value of the goods or services purchased.
How do I calculate VAT?
How to Calculate VAT
- Take the gross amount of any sum (items you sell or buy) – that is, the total including any VAT – and divide it by 117.5, if the VAT rate is 17.5 per cent.
- Multiply the result from Step 1 by 100 to get the pre-VAT total.
How do you calculate VAT?
Do you charge VAT on subcontractors?
Suppliers are no longer required to charge or receive VAT from their main contractor customers. Instead, main contractors effectively charge themselves VAT on subcontractors’ services, and pay the VAT sums that would have been paid to the subcontractor direct to HMRC in their VAT returns.
How do you calculate monthly VAT?
Value Added Tax Payable is normally computed as follows:
- Computing Net VAT Payable on VAT “exclusive” Sales/Receipts. Total Output Tax Due or Total Vatable Sales/Receipts x 12%
- Computing Net VAT Payable on VAT “inclusive” Sales/Receipts. Total Output Tax Due or Total Vatable Sales / 1.12 x 12%
What kind of tax is VAT in Nigeria?
The Value Added Tax Act  (“VAT Act”) was one of the seven (7) principal tax statutes amended by the Finance Act, 2019 (“Finance Act”). Being a tax chargeable on the supply of all non-exempt goods and services, VAT affects more transactions than other taxes and, consequently, attracts wide interest.
When do you pay Value Added Tax in Nigeria?
The VAT rate is 5%, payable every 21st of each month. Value added tax was established by Decree No. 102 of 1993. The dragnet of VAT covers everybody because everybody is a consumer of either goods or services. You can also read about Withholding tax in Nigeria in this post.
How does a non resident company register for VAT in Nigeria?
The VAT Act under section 10 sub 1 also requires Non-resident companies to register with the VAT office using the address of the person or business that it is doing business within Nigeria. Correspondence related to VAT for this business will be sent to this address.
What is the penalty for not remitting VAT to Firs?
The penalty for non-remittance of VAT to the FIRS is N5, 000 per month for every month that the amount is past due. Although VAT is a multiple-stage tax, it has a single effect and does not add more than the specified rate to the consumer price no matter the number of stages at which the tax is paid.