How to Remit VAT in Nigeria: A Comprehensive Guide

Value Added Tax (VAT) is a consumption tax that is levied on goods and services purchased in Nigeria. It is a tax paid by consumers on the value added to the goods and services by businesses. As a business owner in Nigeria, it is important to remit VAT regularly to avoid penalties and legal consequences. In this article, we will discuss everything you need to know about how to remit VAT in Nigeria.

What is VAT?

VAT is a tax on the value added to goods and services during the production and distribution process. It is a consumption tax that is paid by the final consumer of the goods or services. VAT is collected by businesses on behalf of the government and remitted to the Federal Inland Revenue Service (FIRS).

Who is required to pay VAT in Nigeria?

According to the Value Added Tax Act of 1993, any individual or business that engages in the supply of goods and services in Nigeria is required to register for VAT with FIRS and remit VAT regularly. This includes businesses that make taxable supplies worth at least N25 million annually.

How to register for VAT in Nigeria?

To register for VAT in Nigeria, follow the steps below:

1. Visit the FIRS website at www.firs.gov.ng
2. Click on the "Register for VAT" link
3. Fill in the registration form with your business details
4. Submit the form and wait for approval from FIRS
5. Once approved, you will be issued a Tax Identification Number (TIN) and a VAT certificate

How to calculate VAT in Nigeria?

VAT in Nigeria is currently charged at a rate of 7.5% on the value added to goods and services. To calculate VAT, use the formula below:

VAT = (Total Value of Sales – Cost of Goods Sold) x 7.5%

For example, if you sell goods worth N1,000,000 and the cost of goods sold is N750,000, then the VAT payable is calculated as follows:

VAT = (N1,000,000 – N750,000) x 7.5%
= N22,500

When is VAT remitted in Nigeria?

VAT in Nigeria is remitted monthly or quarterly, depending on the size of your business. Businesses that make taxable supplies of at least N100 million annually are required to remit VAT monthly, while those that make taxable supplies below N100 million are required to remit VAT quarterly.

How to remit VAT in Nigeria?

To remit VAT in Nigeria, follow the steps below:

1. Calculate the VAT payable on your sales for the month or quarter
2. Log in to the FIRS e-Tax platform at www.firs.gov.ng/e-tax
3. Click on "Payment" and select "VAT"
4. Fill in the necessary information and submit the payment
5. Print the payment receipt and keep for your records

What happens if you do not remit VAT in Nigeria?

Failure to remit VAT in Nigeria can result in penalties and legal consequences. The penalties for non-compliance include a 5% monthly interest on the outstanding VAT amount and a fine of N50,000 for the first month of default and N25,000 for each subsequent month of default. In addition, FIRS can take legal action against defaulters, including seizure of assets and closure of business premises.

How to avoid penalties for non-remittance of VAT in Nigeria?

To avoid penalties for non-remittance of VAT in Nigeria, ensure you register for VAT with FIRS and remit VAT regularly. Keep accurate records of your sales and purchases, and calculate VAT correctly. If you have difficulty calculating VAT, seek the assistance of a tax professional.

Conclusion

VAT is an important tax in Nigeria, and it is important for businesses to remit VAT regularly to avoid penalties and legal consequences. To remit VAT in Nigeria, register for VAT with FIRS, calculate VAT correctly, and remit VAT monthly or quarterly as required. Keep accurate records of your sales and purchases, and seek the assistance of a tax professional if necessary.

FAQs

1. What is the penalty for late payment of VAT in Nigeria?

   • The penalty for late payment of VAT in Nigeria is a 5% monthly interest on the outstanding VAT amount.

2. Can I get a VAT refund in Nigeria?

   • Yes, businesses that have excess VAT paid can apply for a VAT refund from FIRS.

3. What happens if I do not register for VAT in Nigeria?

   • Failure to register for VAT in Nigeria can result in penalties and legal consequences.

4. How do I correct errors in my VAT returns in Nigeria?

   • To correct errors in your VAT returns in Nigeria, submit an amended VAT return to FIRS.

5. How often should I file my VAT returns in Nigeria?

   • Businesses that make taxable supplies of at least N100 million annually are required to file their VAT returns monthly, while those that make taxable supplies below N100 million are required to file their VAT returns quarterly.