How to Calculate VAT in Nigeria 2021

If you are a business owner in Nigeria, it is important to understand how to calculate Value Added Tax (VAT). VAT is a tax that is levied on the sale of goods and services in Nigeria. In this article, we will discuss everything you need to know about calculating VAT in Nigeria in 2021.

What is VAT?

Value Added Tax (VAT) is a consumption tax that is levied on the sale of goods and services. It is a tax that is added to the value of goods and services at each stage of production and distribution. The tax is ultimately borne by the final consumer of the goods and services.

How is VAT Calculated in Nigeria?

In Nigeria, VAT is calculated as a percentage of the value of goods and services. The current rate of VAT in Nigeria is 7.5%. To calculate VAT, you need to multiply the value of goods and services by 7.5%. For example, if the value of goods and services is 100,000 Naira, the VAT would be 7,500 Naira.

Who is Required to Pay VAT in Nigeria?

All businesses that sell goods and services in Nigeria are required to pay VAT. This includes individuals, sole proprietors, partnerships, and corporations. VAT is also applicable to imports into Nigeria.

How to Register for VAT in Nigeria?

If your business is required to pay VAT in Nigeria, you must register for VAT with the Federal Inland Revenue Service (FIRS). To register for VAT, you must submit an application to the FIRS and provide the necessary documentation. Once your application is approved, you will be issued a VAT registration number.

How to File VAT Returns in Nigeria?

Businesses that are registered for VAT in Nigeria are required to file VAT returns with the FIRS. VAT returns must be filed on a monthly basis and must be submitted by the 21st day of the month following the month in which the VAT was collected. To file a VAT return, you must provide a summary of all VAT collected and paid during the month.

What are the Penalties for Non-Compliance with VAT Regulations in Nigeria?

If your business fails to comply with VAT regulations in Nigeria, you may be subject to penalties and fines. The penalties for non-compliance with VAT regulations in Nigeria include a penalty of 5% of the amount of tax due plus interest. In addition, the FIRS may impose further penalties, including the revocation of your VAT registration.

What are the Exemptions and Zero-Rated Supplies for VAT in Nigeria?

There are certain goods and services that are exempt from VAT in Nigeria. These include basic food items, medical supplies, educational materials, and certain exports. In addition, some goods and services are subject to zero-rated VAT. This means that VAT is charged at a rate of 0%. Zero-rated supplies include exports, certain agricultural products, and certain medical services.

Conclusion

In conclusion, calculating VAT in Nigeria is an important part of running a business in the country. As a business owner, it is your responsibility to register for VAT, file VAT returns, and comply with all VAT regulations in Nigeria. By understanding the basics of VAT in Nigeria, you can ensure that your business is in compliance with the law and avoid penalties and fines.

FAQs

What is the current rate of VAT in Nigeria?
The current rate of VAT in Nigeria is 7.5%.
Who is required to pay VAT in Nigeria?
All businesses that sell goods and services in Nigeria are required to pay VAT.
How do I register for VAT in Nigeria?
To register for VAT in Nigeria, you must submit an application to the Federal Inland Revenue Service (FIRS).
How often do I need to file VAT returns in Nigeria?
Businesses that are registered for VAT in Nigeria are required to file VAT returns on a monthly basis.
What are the penalties for non-compliance with VAT regulations in Nigeria?
The penalties for non-compliance with VAT regulations in Nigeria include a penalty of 5% of the amount of tax due plus interest.