Value Added Tax — VAT — is one of those taxes that almost every Nigerian business will deal with at some point. Whether you're running a tech startup in Lekki, a supermarket in Abuja, or a consulting firm anywhere in the country, the question eventually comes up: "Do I need to register for VAT?"
The answer depends on your turnover, what you sell, and whether you want to claim input VAT credits. This guide breaks down everything you need to know about VAT registration in Nigeria under the Nigeria Tax Act (NTA) 2025 — who must register, who doesn't need to, how to do it, and what happens once you're registered.
Quick answer: If your business turnover exceeds ₦25 million in any consecutive 12-month period, you are legally required to register for VAT and begin charging 7.5% on taxable supplies. Below that threshold, registration is voluntary.
What Is VAT in Nigeria?
VAT is a consumption tax charged on the supply of taxable goods and services in Nigeria. It's collected at each stage of the supply chain, but ultimately borne by the final consumer. The current rate, as at the time of writing, is 7.5% on all taxable goods and services under the NTA 2025.
Here's how it works in practice: you sell a product or service, you add 7.5% VAT on top, the customer pays you that total amount, and you remit the VAT portion to the Nigeria Revenue Service (NRS). But you can subtract any VAT you paid on your own business purchases (input VAT) before remitting. So you only remit the difference.
That "difference" mechanism is exactly why it's called a Value Added Tax — you're only paying tax on the value you added, not on the full price.
Who Administers VAT?
The Nigeria Revenue Service (NRS) administers VAT at the federal level. Registration, filing, and payments are all handled through the NRS's Rev360 portal (previously known as the FIRS Tax Pro portal). State Internal Revenue Services handle state-level taxes, but VAT is a federal matter.
The ₦25 Million Threshold: Who Must Register
Under Section 37 of the NTA 2025, VAT registration is mandatory for any person or business that makes taxable supplies exceeding ₦25 million in any consecutive 12-month period.
Let's break that down:
- "Any consecutive 12-month period" — this isn't necessarily January to December. If your turnover crosses ₦25M at any point in a rolling 12-month window, you're caught. So if you did ₦10M between January and June, and then ₦16M between July and December, your 12-month total is ₦26M — you must register.
- "Taxable supplies" — this excludes exempt supplies (more on that below). Only count the goods and services that are subject to VAT.
- "Any person" — individuals, companies, partnerships, sole traders. The legal form doesn't matter. If you make taxable supplies above ₦25M, you register.
Important: The ₦25M threshold is measured on revenue (turnover), not profit. If your business generates ₦30M in sales but only makes ₦2M profit, you still must register because your turnover exceeds ₦25M.
When Do You Register?
You must register within the month your turnover crosses the ₦25M threshold. Don't wait until year-end. If you cross it in March, you should be registered by the end of March. Once registered, you start charging VAT from the following month.
Example: Aisha runs a catering company. Between April 2025 and March 2026, her total sales hit ₦27M. She crosses the ₦25M threshold in February 2026 (cumulative sales from the preceding 12 months exceed ₦25M). She must register for VAT by the end of February 2026 and start charging 7.5% on her invoices from March 2026 onwards.
Voluntary Registration: Below ₦25M
If your turnover is below ₦25M, you're not required to register — but you can choose to. This is called voluntary registration, and there are good reasons to consider it.
Why Would You Voluntarily Register?
- Input VAT credits: If you're not VAT-registered, you can't claim back the VAT you pay on your own business purchases. If you buy supplies worth ₦5M, you're paying ₦375,000 in VAT that you can never recover. Registration lets you claim that back.
- Business credibility: Larger companies prefer working with VAT-registered suppliers because they can claim input credits on your invoices. Being VAT-registered makes you a more attractive vendor.
- Preparing for growth: If you're approaching ₦25M and will cross it soon, registering early means you don't have to rush the process later.
- Government contracts: Many government procurement processes require vendors to be VAT-registered, regardless of turnover.
The trade-off: Once you voluntarily register, you take on all the same obligations as mandatory registrants — monthly filing by the 21st, charging 7.5% on invoices, keeping proper records. You can't register for the benefits and ignore the obligations.
Who Should NOT Voluntarily Register?
If your customers are primarily individuals (B2C) who can't claim VAT credits anyway, and your own input VAT is minimal, voluntary registration just adds admin work with little benefit. A freelance graphic designer earning ₦3M/year whose clients are individuals probably doesn't need VAT registration.
VAT-Exempt Goods and Services
Not everything is subject to VAT. The NTA 2025 specifies certain goods and services that are exempt from VAT entirely. If your business deals exclusively in exempt supplies, you don't need to register for VAT — regardless of turnover.
Exempt Goods
| Category | Examples |
|---|---|
| Basic food items | Unprocessed agricultural produce — raw rice, beans, yam, tomatoes, vegetables, fruits, grains |
| Medical & pharmaceutical | Medicines, medical equipment, pharmaceutical products |
| Educational materials | Books, textbooks, educational equipment, school supplies |
| Baby products | Baby food, diapers, baby clothing, infant care items |
| Fuel (specific) | Diesel, Compressed Natural Gas (CNG) |
| Exported goods | All goods exported outside Nigeria (zero-rated, technically) |
Exempt Services
- Medical services provided by hospitals and clinics
- Educational services by accredited institutions
- Public transportation (mass transit)
- Plays and performances conducted by educational institutions
Note on "basic food": The exemption applies to unprocessed food. Once food is processed, packaged, or sold in restaurants, it typically becomes taxable. Raw tomatoes from the market? Exempt. Canned tomato paste from a supermarket? Taxable. This distinction trips up many business owners.
Exempt vs. Zero-Rated: The Critical Difference
This is one of the most commonly confused areas of VAT law. Exempt and zero-rated are not the same thing — and the difference has real financial consequences.
| Feature | VAT-Exempt | Zero-Rated |
|---|---|---|
| VAT charged to customer | None | 0% (technically charged at zero) |
| Must file VAT returns? | No (if all supplies are exempt) | Yes |
| Can claim input VAT credits? | No | Yes |
| Must register for VAT? | No (if exclusively exempt) | Yes (if above threshold) |
| Examples | Unprocessed food, medicine, education | Exported goods and services |
The key difference: if you make zero-rated supplies (like exports), you still register for VAT, still file monthly returns, but charge 0% to your customers. The advantage? You can claim back all the VAT you paid on your inputs. So if you're an exporter who buys ₦50M in raw materials domestically (paying ₦3.75M in input VAT), you can claim that entire ₦3.75M back from NRS because your output VAT is zero.
If you make exempt supplies, you can't claim any input VAT. The VAT you pay on purchases is a cost to your business — it's absorbed, not recovered.
Example: Chidi runs a pharmaceutical company that also exports drugs to Ghana. His domestic medicine sales are exempt (no VAT charged, no input credit). But his exports to Ghana are zero-rated — he charges 0% VAT but can claim back the input VAT on the raw materials he bought to manufacture those exports. Two different treatments for two different supply categories within the same business.
How to Register for VAT: The Process
VAT registration in Nigeria is done through the NRS Rev360 portal (formerly the FIRS Tax Pro portal). As at the time of writing, here's the process:
Step 1: Get Your Tax Identification Number (TIN)
Before you can register for VAT, you need a TIN. Under the NTA 2025, your NIN (for individuals) or CAC registration number (for companies) serves as the basis for your Tax ID. If you don't already have a TIN, you'll need to obtain one through the NRS portal first.
Step 2: Access the Rev360 Portal
Visit the NRS Rev360 portal and log in with your credentials. If you're a first-time user, you'll need to create an account using your TIN.
Step 3: Complete the VAT Registration Form
Navigate to the registration section and select VAT registration. You'll need to provide:
- Business name and address
- Nature of business activities
- Expected annual turnover
- Business commencement date
- Bank account details
- Details of taxable supplies
- CAC registration certificate (for companies)
Step 4: Submit and Await Confirmation
After submission, NRS reviews your application. Approval typically takes 5–10 working days, as at the time of writing. Once approved, you receive your VAT registration number — this goes on every invoice you issue.
Step 5: Start Charging VAT
From the effective date of registration, you must charge 7.5% VAT on all taxable invoices. Your invoice must show the VAT amount separately — not bundled into the price without disclosure.
Pro tip: Keep your VAT registration certificate accessible. Customers (especially corporate ones) may request to see it before paying your VAT-inclusive invoices. They need to confirm you're legitimately registered before they can claim input credit on your invoice.
What Happens After Registration
Once you're VAT-registered, several obligations kick in immediately:
Monthly Filing
You must file a monthly VAT return by the 21st of the month following the reporting period. January's VAT return is due by February 21st. This is non-negotiable — even if you had no sales, you file a nil return.
Charge 7.5% on Invoices
Every invoice for taxable goods or services must show VAT at 7.5%. Your invoice should clearly state:
- The net amount (before VAT)
- The VAT amount (7.5% of net)
- The gross amount (net + VAT)
- Your VAT registration number
Claim Input VAT Credits
Under the NTA 2025, you can claim input VAT on virtually all business purchases — including services and fixed assets. This is a significant expansion from the previous regime, which restricted input claims on certain categories. Keep all purchase invoices as proof.
Keep Records for 6 Years
The NTA 2025 requires you to maintain records of all transactions for at least 6 years. This includes sales invoices, purchase invoices, bank statements, and VAT computations.
Example: Ngozi registers for VAT in March 2026. In April, she sells consulting services worth ₦2,000,000. She issues an invoice showing ₦2,000,000 + ₦150,000 VAT = ₦2,150,000. In the same month, she buys a laptop for ₦800,000 + ₦60,000 VAT. Her April VAT return (due May 21): Output VAT ₦150,000 − Input VAT ₦60,000 = Net payable ₦90,000.
Penalties for Not Registering When Required
If your turnover exceeds ₦25M and you don't register, the NRS can impose penalties:
- ₦50,000 for the first month of non-compliance
- ₦25,000 for each subsequent month you remain unregistered
- Back-assessment: NRS can assess you for VAT you should have charged and remitted during the period you were unregistered — meaning you owe the 7.5% you never collected from customers, plus penalties and interest
The real risk: The back-assessment is the killer. If NRS determines you should have been registered for 12 months and your taxable sales were ₦30M during that period, they'll assess you for ₦2.25M in VAT you never collected — plus interest. You eat that cost because you can't go back and charge your customers after the fact.
Who Doesn't Need to Register for VAT
Not every business needs VAT registration. You're off the hook if:
- Your turnover is below ₦25M and you don't want to voluntarily register
- You only make exempt supplies — if 100% of your goods/services are VAT-exempt (e.g., you sell only unprocessed food items), you don't register regardless of turnover
- You're an employee — salary earners don't register for VAT. Your employer handles PAYE, not VAT.
- You're a non-resident without a fixed place of business in Nigeria — though the reverse charge mechanism may apply to your Nigerian customers
Mixed Supplies: Part Exempt, Part Taxable
If you make both exempt and taxable supplies, you only count your taxable supplies toward the ₦25M threshold. A pharmacy selling both medicines (exempt) and cosmetics (taxable) only counts cosmetic sales toward the threshold.
However, if your taxable supplies cross ₦25M, you register — and you only charge VAT on the taxable portion. The exempt items remain exempt. You'll need to apportion your input VAT between the two categories (you can only claim input credits related to taxable supplies).
The Registration Decision: A Practical Framework
Still not sure whether to register? Here's a simple decision tree:
| Scenario | Must Register? | Should Register? |
|---|---|---|
| Turnover above ₦25M, taxable supplies | Yes — mandatory | N/A — no choice |
| Turnover below ₦25M, sells to businesses | No | Probably yes — input credits + business credibility |
| Turnover below ₦25M, sells to individuals | No | Probably no — individuals can't claim VAT credits anyway |
| Only exempt supplies, any turnover | No | No — nothing to gain |
| Exporter (zero-rated supplies) | Yes (if above threshold) | Yes — recover all input VAT |
| Approaching ₦25M, growing fast | Not yet | Yes — get ahead of it |
Common Questions About VAT Registration
Can I de-register if my turnover drops below ₦25M?
Yes, but only after remaining below the threshold for a continuous 12-month period. You apply to NRS for de-registration. However, consider whether de-registering makes sense — you'll lose input VAT credit ability.
I just started my business. Do I register immediately?
Not unless you reasonably expect to exceed ₦25M within your first 12 months. If you're a new startup with no revenue yet, wait until your turnover approaches or crosses the threshold. But if you've won a contract that guarantees ₦30M in your first year — register now.
Does the ₦25M threshold include VAT itself?
No. The threshold is measured on the value of your taxable supplies before VAT. It's your net sales figure, not the VAT-inclusive amount.
What about e-commerce businesses?
Same rules apply. If your online store's taxable sales exceed ₦25M in any 12 months, you register. The platform doesn't matter — whether you sell on your own website, Instagram, or through a marketplace, it's your turnover that determines the obligation.
My accountant says I don't need VAT registration. Is that right?
Maybe. If your turnover is genuinely below ₦25M and all or most of your supplies are to end consumers, your accountant might be correct. But verify — have them show you the calculation of your 12-month rolling turnover. Many businesses are surprised when they actually add up all their invoices.
Example: Emeka runs an event planning business. He thinks he's below the threshold because his "big" contracts are only 4-5 per year. But when he adds up all his small gigs, vendor coordination fees, and consultation charges, his actual 12-month taxable turnover is ₦28M. He's been operating above the threshold without knowing it. He needs to register immediately and file going forward.
VAT Registration and Taxly
Once you're VAT-registered, the monthly filing obligation begins. That's 12 returns per year, each due by the 21st. Many business owners find this the most tedious part — not the registration itself, but the ongoing monthly compliance.
Taxly simplifies this. Upload your monthly invoices and bank statement, and our accountants compute your output VAT, input VAT, and net payable — then file with NRS on your behalf. No form-filling, no portal navigation, no deadline anxiety.
Already VAT-registered? Let Taxly handle your monthly filings
Upload invoices, we compute and file. Every month. On time. No penalties.
Start Filing on Taxly →Key Takeaways
- VAT rate is 7.5% on taxable goods and services under the NTA 2025
- Registration is mandatory if turnover exceeds ₦25M in any rolling 12-month period
- Below ₦25M, registration is voluntary — but beneficial if you sell to businesses
- Exempt supplies (food, medicine, education, baby products) are completely outside the VAT system
- Zero-rated supplies (exports) are in the system but at 0% — and you can claim input credits
- Register through the NRS Rev360 portal with your TIN
- After registration: file monthly by the 21st, charge 7.5%, claim input credits
- Penalty for non-registration: ₦50,000 first month + ₦25,000 each subsequent month + back-assessment risk