Do small businesses charge VAT in Nigeria?
Not if they qualify as small businesses under the Nigeria Tax Act 2025. Above the limits, 7.5% VAT applies.
Small businesses with annual turnover of NGN 100 million or less and total fixed assets not above NGN 250 million are reported to be exempt from VAT registration, charging VAT and filing VAT returns under the Nigeria Tax Act 2025. They may opt out of the exemption by written notice, for example to recover input VAT. Sources differ on the limits, so confirm them with NRS or your accountant. Above the limits, register and charge VAT at 7.5%.
- Reported limits: turnover NGN 100m or less and fixed assets up to NGN 250m.
- Qualifying small businesses need not charge VAT.
- They may opt in by written notice.
- Above the limits: register and charge 7.5%.
How it works
Add up your annual gross turnover and your fixed assets.
Compare them with the small business limits in the Act.
If you qualify and stay exempt, do not show VAT on invoices.
If you opt in or exceed the limits, register and put 7.5% on your invoice lines.
Review your position each year.
Legal framework
- Nigeria Tax Act 2025 (small company and VAT provisions).
- Nigeria Tax Administration Act 2025.
Frequently asked questions
Can an exempt small business still get VAT invoices from suppliers?
Yes. Suppliers who are registered still charge VAT to you. As an exempt business you generally cannot claim it back unless you opt in.
Why do sources give different limits?
The Act has different definitions for different taxes and earlier drafts used other figures. Check the enacted text or ask NRS.
Does 4invoices decide whether I am exempt?
No. You choose the VAT rate on each line, including 0%. 4invoices does not assess your eligibility.
Does 4invoices connect to NRS or the Merchant Buyer Solution?
No. 4invoices creates invoices with a VAT or tax rate per line, supports any currency with an exchange rate, and lets you download a PDF. It does not connect to the tax authority, does not clear or validate invoices, does not issue an Invoice Reference Number and does not file returns. If you must use MBS, use an approved Access Point Provider or system integrator.