VAT and invoicing in Nigeria (2026): rates, NRS and e-invoicing

Nigeria rewrote its tax laws in 2025. Since 1 January 2026, value added tax (VAT) is governed by the Nigeria Tax Act 2025, which repealed the old Value Added Tax Act, and administered under the Nigeria Tax Administration Act 2025. The Federal Inland Revenue Service (FIRS) has become the Nigeria Revenue Service (NRS). This guide explains what that means for a small business: the rates, who must charge VAT, what goes on a VAT invoice, when to file, and how the NRS e-invoicing system is being rolled out.

VAT in Nigeria at a glance

The rate did not change. Despite much debate during the reforms, VAT remains 7.5% (section 148 of the Nigeria Tax Act). Zero-rated supplies are listed in sections 186 and 187: you charge 0% on them and can still recover the VAT on your related costs. Exempt supplies carry no VAT, and the input VAT on them cannot be recovered.

Input VAT is broader now. Under the new regime, the VAT you pay on services and capital expenditure used for your taxable supplies is recoverable, provided each claim is supported by a valid VAT invoice.

Who must register and charge VAT

Every business above the exemption threshold that supplies taxable goods or services in Nigeria must register for VAT, charge it and file returns. This includes companies, partnerships, sole proprietors and non-resident suppliers of digital or physical goods and services to Nigerian customers.

Small companies are exempt from filing and paying VAT. The NRS defines a small business as one with:

• annual turnover of ₦100 million or less, and
• total fixed assets below ₦250 million,
• excluding professional service providers, who do not qualify whatever their size.

Even an exempt small company must register with the NRS, hold a Tax ID, keep records and file its annual returns.

Your Tax ID. From 1 January 2026, a 13-digit Tax ID replaced the old TIN as the identifier for tax administration. For a business it is linked to its Corporate Affairs Commission (CAC) registration number; you can retrieve it on the Tax ID portal (taxid.nrs.gov.ng). Since July 2026 the Tax ID is also the identifier used on NRS e-invoices.

Non-resident suppliers must register and include VAT on their invoices. Where a non-resident supplies a Nigerian business from abroad, the Nigerian customer withholds the VAT and pays it to the NRS.

VAT returns, payment and refunds

• Frequency: monthly.
• Deadline: file and pay by the 21st day of the month following the month of the transactions, online through the NRS portal or at designated banks.
• VAT payable: output VAT on your sales minus input VAT on your purchases; if input VAT is higher, the difference is refundable.
• Refunds: a VAT refund must be claimed within 12 months of the transaction.
• VAT deducted at source: some customers, such as government agencies, banks, oil and gas companies and the largest telecoms operators, deduct VAT at source and pay it to the NRS themselves, so you receive the invoice amount without the VAT. Keep the evidence of what they withheld.

Penalties. The NRS lists ₦100,000 for the first month of late registration or late filing and ₦50,000 for each further month, plus interest on unpaid VAT. PwC reports that late payment of any tax attracts a penalty of 10% of the unpaid amount, with interest at the Central Bank of Nigeria's monetary policy rate plus a spread set by the Minister.

If you disagree with a VAT assessment or penalty, you can object to the NRS within 30 days of the notice, and appeal further to the Tax Appeal Tribunal.

Invoices: what the law requires

Under the Nigeria Tax Act, a taxable person must keep sequential invoice numbering and give the customer a VAT invoice for every taxable supply, showing:

The VAT invoice must be issued at the time of supply, whether or not the customer pays then. A pro-forma or a payment request is not a substitute.

Corrections. Do not edit, reuse or delete an invoice number once issued. To reduce or cancel an invoice, issue a credit note that refers to the original invoice number, and for an increase issue a new invoice or a debit note, so the trail from the original to the correction is clear.

Records. Keep your books of account in English (or with a certified translation) for at least six years after the relevant year of assessment, together with your invoices, receipts, contracts and VAT returns.

E-invoicing in Nigeria: the NRS Merchant Buyer Solution

Section 158 of the Nigeria Tax Act requires taxpayers to implement the fiscalisation system deployed by the NRS, and section 23 of the Nigeria Tax Administration Act lets the NRS use technology to administer taxes. The system is the National E-Invoicing and Electronic Fiscal System (EFS), also called the Merchant Buyer Solution (MBS): each invoice is transmitted to the NRS platform and receives an Invoice Reference Number (IRN). Businesses connect through NRS-approved Access Point Providers or System Integrators, or integrate directly.

The rollout, from the NRS public notice of February 2026:

A few points to note:

• The NRS calls these timelines indicative: they can move with operational readiness, and enforcement starts only after the engagement, pilot and review phases for each segment.
• In July 2026 the NRS began compliance monitoring of large taxpayers and gave those not yet compliant until 31 July 2026. Large taxpayers are told to accept only compliant e-invoices with a valid IRN from their suppliers, so a small supplier to a large company may be asked for NRS e-invoices before its own phase begins.
• PwC reports that failing to implement the fiscalisation system can cost ₦200,000 plus 100% of the tax due, plus interest.

If you are in scope, you need an NRS-approved e-invoicing solution or provider to transmit your invoices; the NRS publishes a directory of approved providers on its e-invoicing portal.

A worked example in naira

You run a trading company with turnover above ₦100 million, so you charge VAT. In March you invoice customers ₦4,000,000 plus 7.5% VAT.

1. 1Output VAT: ₦4,000,000 × 7.5% = ₦300,000; your customers pay ₦4,300,000.
2. 2Input VAT: you buy a delivery motorcycle for ₦1,200,000 plus ₦90,000 VAT and pay for logistics services of ₦800,000 plus ₦60,000 VAT, with valid VAT invoices. Input VAT = ₦90,000 + ₦60,000 = ₦150,000. Both are now recoverable: one is capital expenditure, the other a service.
3. 3VAT payable: ₦300,000 − ₦150,000 = ₦150,000, due by 21 April.

To find the VAT inside a VAT-inclusive price, multiply by 7.5 and divide by 107.5: ₦10,750 × 7.5 ÷ 107.5 = ₦750 VAT, so the price before VAT is ₦10,000.

Common VAT mistakes in Nigeria

1. 1Assuming you are a small company when you provide professional services, or when your fixed assets pass ₦250 million.
2. 2Not claiming input VAT on services and capital purchases, which the new law now allows.
3. 3Missing the 21st. Late filing costs ₦100,000 for the first month and ₦50,000 for every month after.
4. 4Incomplete VAT invoices, for example without your Tax ID or your CAC registration number.
5. 5Issuing the invoice only when you are paid. The VAT invoice is due at the time of supply.
6. 6Ignoring e-invoicing because you are small. Large customers must receive IRN-validated e-invoices, and your own phase is scheduled.
7. 7Letting refund claims expire after 12 months, or keeping records for less than six years.

How Clientlly helps

Clientlly keeps your invoicing and VAT records in order before they reach the NRS:

• Sequential invoice numbering per series, with the 7.5% and 0% rates on every invoice.
• Credit notes linked to the original invoice, so every correction is traceable.
• Sales and purchase VAT books per rate, including exports, and VAT reports for you and your accountant, with Excel and PDF exports.
• Receipt scanning that reads the VAT automatically, to support your input VAT claims.
• Multiple currencies, invoice PDFs in your client's language, a card payment link on the invoice and a record of when each invoice was opened.
• Automatic reminders 3, 14 and 30 days after the due date, recurring invoices, and a mobile app. See our guide to getting paid faster.

Clientlly is not an NRS-approved e-invoicing provider and does not transmit invoices to the MBS platform; when your segment is in scope, that part needs an approved Access Point Provider or System Integrator. See the invoicing features and the accounting module.