How to calculate VAT in Nigeria: multiply the price before VAT by 0.075 to find the VAT, or by 1.075 to find the total the customer pays. To remove VAT from a VAT-inclusive price, divide it by 1.075. So ₦20,000 plus 7.5% VAT is ₦21,500, and ₦21,500 divided by 1.075 takes you back to ₦20,000.
The rate is still 7.5%. The Nigeria Tax Act 2025 kept it when it replaced the old VAT Act on 1 January 2026, and VAT is now collected by the Nigeria Revenue Service (NRS), which took over from FIRS on the same day. Below are worked Naira examples, a reference table and a plain answer to the bigger question: do you have to charge VAT at all?
How to calculate VAT in Nigeria: the two formulas
Every VAT sum is one of two jobs: adding VAT to a price, or finding the VAT already inside one.
| What you want | Formula | ₦10,000 example |
|---|---|---|
| VAT on a price before VAT | Price × 0.075 | ₦750 |
| Total with VAT | Price × 1.075 | ₦10,750 |
| Price before VAT, from a VAT-inclusive price | Price ÷ 1.075 | ₦9,302.33 |
| VAT inside a VAT-inclusive price | Price × 7.5 ÷ 107.5 | ₦697.67 |
The last two rows are the VAT inclusive price formula. In the first two rows ₦10,000 is the price before VAT; in the last two it is what the customer pays.
Adding 7.5% VAT to a price: worked example
Say a printing business that is registered for VAT charges ₦20,000 for a batch of flyers.
- VAT: ₦20,000 × 0.075 = ₦1,500.
- Total: ₦20,000 + ₦1,500 = ₦21,500. In one step: ₦20,000 × 1.075 = ₦21,500.
On the invoice, show the ₦20,000, the ₦1,500 VAT and the ₦21,500 total on separate lines. A VAT-registered business customer can then claim the ₦1,500 as input VAT if the flyers are for its taxable sales (more on that below).
Removing VAT from a VAT-inclusive price: divide by 1.075
Shops and restaurants often display prices with VAT included. To remove VAT from a price like that, divide by 1.075.
Example: a shelf price of ₦10,000 including VAT.
- Price before VAT: ₦10,000 ÷ 1.075 = ₦9,302.33
- VAT inside it: ₦10,000 − ₦9,302.33 = ₦697.67
The common mistake is to take 7.5% of the VAT-inclusive price: ₦10,000 × 0.075 = ₦750, leaving ₦9,250. That overstates the VAT by ₦52.33, because the 7.5% was charged on ₦9,302.33, not on ₦10,000.
VAT with discounts, delivery fees and part payments
Take the discount off first, then add VAT
VAT is charged on the consideration, which is what the customer actually pays you for the supply. A discount you give on the invoice therefore comes off before VAT is worked out.
Example: 50 cartons at ₦4,000 each is ₦200,000, and you give a 10% discount of ₦20,000.
- Net price: ₦200,000 − ₦20,000 = ₦180,000
- VAT: ₦180,000 × 0.075 = ₦13,500
- Total: ₦193,500
Working out VAT on the ₦200,000 before the discount would put ₦15,000 of VAT on the invoice, ₦1,500 more than the customer should pay.
Delivery fees
A delivery charge is a fee for a service, and services carry VAT at 7.5% unless the law zero-rates or exempts them. So if you are VAT-registered and add a delivery fee to the order, include it in the amount you charge VAT on.
Continuing the example: ₦180,000 of goods plus ₦5,000 delivery is ₦185,000. VAT is ₦185,000 × 0.075 = ₦13,875, and the total is ₦198,875. If the goods themselves are zero-rated or exempt, ask your accountant how to treat the delivery line.
Part payments and deposits
When a customer pays in instalments, each payment carries VAT in the same proportion as the total.
Example: a ₦100,000 deposit towards the ₦198,875 order above contains ₦100,000 × 7.5 ÷ 107.5 = ₦6,976.74 of VAT and ₦93,023.26 towards the goods and delivery. Show that split on each receipt.
Standard-rated, zero-rated and exempt: why some items carry no VAT
Not everything carries 7.5%. The Act sorts supplies into three groups.
| Group | VAT on the sale | Can the seller claim back VAT on its costs? |
|---|---|---|
| Standard-rated (most goods and services) | 7.5% | Yes |
| Zero-rated | 0% | Yes |
| Exempt | None | No |
Zero-rated items are still inside the VAT system, just at 0%. The seller charges no VAT but can recover the VAT it paid on related costs. EY’s summary of the Act lists basic food items, medical and pharmaceutical products, educational books and materials, and electricity supplied to the grid among the zero-rated supplies. The list also covers tuition, medical services and exports other than oil and gas.
Exempt items sit outside VAT altogether: no VAT is charged, and the seller cannot claim back the VAT on related costs, so that VAT becomes part of its costs. According to TheCable’s list of exempt items, VAT exempt goods and services in Nigeria now include land and buildings, money and securities, shared passenger road transport, baby products and locally made sanitary products.
The exact wording of each list matters, so check with your accountant before you stop charging VAT on a product line.
Do small businesses have to charge VAT in 2026?
Many do not. The small business VAT exemption in Nigeria sits in the Nigeria Tax Administration Act 2025: a qualifying small business does not have to register for VAT, charge it or file monthly VAT returns. It must have:
- gross turnover within the yearly limit (see below),
- fixed assets of less than ₦250 million, and
- no professional services. Law firms, accounting practices and consultancies do not qualify, whatever their size.
The turnover limit is where guides disagree. TheCable compared the two Acts: the Tax Administration Act, which holds the VAT relief, sets ₦100 million for a small business, while the Nigeria Tax Act’s small company test, used for income tax, is ₦50 million. Taiwo Oyedele, who chairs the Presidential Fiscal Policy and Tax Reforms Committee, told TheCable that ₦100 million is correct and the ₦50 million is an error.
So if your turnover is ₦50 million or less and you meet the other two conditions, you are covered on either reading. Between ₦50 million and ₦100 million, get your accountant’s or the NRS’s view in writing before you invoice without VAT.
BDO explains the practical side: a small company under the exemption cannot issue VAT-inclusive invoices, but it can opt out, charge VAT and file returns. That can make sense if most of your customers are VAT-registered businesses, or if you pay a lot of VAT on costs you could otherwise claim back.
Input VAT and output VAT: what you actually remit
Output VAT is the VAT you charge your customers. Input VAT is the VAT you pay your own suppliers. You pay the NRS the difference.
Example for one month:
- Sales before VAT: ₦2,000,000, so output VAT is ₦150,000
- Purchases used for those sales, before VAT: ₦800,000, so input VAT is ₦60,000
- VAT to remit: ₦150,000 − ₦60,000 = ₦90,000
The 2025 reforms widened what you can claim. Input VAT on services and fixed assets used for taxable supplies now counts, not just VAT on goods. Where a cost serves both taxable and exempt supplies, only the share that relates to taxable supplies can be claimed, and claims must be made within five years.
The return is due on or before the 21st day of the month after the transactions, and PwC’s summary of Nigerian tax administration notes this applies even in a month with no sales. If your input VAT is higher than your output VAT, you can claim the excess back from the NRS.
Quick VAT reference table for common amounts
For a fast 7.5% VAT calculation, read across. The middle columns add VAT; the last two take it out of an amount that already includes VAT.
| Amount | VAT added (7.5%) | Total with VAT | Before VAT, if the amount includes VAT | VAT inside it |
|---|---|---|---|---|
| ₦1,000 | ₦75 | ₦1,075 | ₦930.23 | ₦69.77 |
| ₦5,000 | ₦375 | ₦5,375 | ₦4,651.16 | ₦348.84 |
| ₦10,000 | ₦750 | ₦10,750 | ₦9,302.33 | ₦697.67 |
| ₦50,000 | ₦3,750 | ₦53,750 | ₦46,511.63 | ₦3,488.37 |
| ₦100,000 | ₦7,500 | ₦107,500 | ₦93,023.26 | ₦6,976.74 |
| ₦250,000 | ₦18,750 | ₦268,750 | ₦232,558.14 | ₦17,441.86 |
| ₦1,000,000 | ₦75,000 | ₦1,075,000 | ₦930,232.56 | ₦69,767.44 |
Working it out with the Pricing, Profit & VAT Calculator
The free Pricing, Profit & VAT Calculator does these sums in your web browser, with no sign-up.
- Under Calculation, choose Add or remove VAT. The VAT rate % box already shows 7.5.
- Under What to do, pick Add VAT to these amounts or Take VAT out (amounts already include it).
- Type each item and its amount to see the total before VAT, the VAT and the total with VAT.
- Print the result or save it as a PDF through your browser’s print window.
To set prices, switch to Selling price from my cost, enter your costs and target margin, tick Add VAT on top and choose how to round the price. Its Price list for many products option does the same for a whole range, and the Price List maker turns the final prices into a list to share with customers. Then send a quotation before the job and bill with the free invoice generator, where the VAT % field defaults to 7.5 and can be set to 0 if you do not charge VAT. It also handles discounts, delivery and part payments. All our free business tools work the same way.
Frequently asked questions
What is the VAT rate in Nigeria in 2026?
The standard rate is 7.5%. The Nigeria Tax Act 2025 kept it when it replaced the old VAT Act on 1 January 2026. Zero-rated items, such as basic food items and educational books, are charged at 0%, and exempt items, such as land and buildings, carry no VAT at all.
How do I remove VAT from a price that includes VAT?
Divide the VAT-inclusive price by 1.075 to get the price before VAT, then subtract that from the original price to find the VAT. For ₦10,000, that is ₦9,302.33 before VAT and ₦697.67 VAT. Do not simply take 7.5% off the total, because that overstates the VAT.
Is VAT calculated before or after a discount?
After. VAT is charged on the amount the customer actually pays for the supply, so take the discount off first and then add 7.5%. On a ₦200,000 order with a ₦20,000 discount, the VAT is ₦13,500 on ₦180,000, not ₦15,000 on the full ₦200,000.
Do small businesses have to charge VAT in Nigeria?
Not if they qualify as a small business: turnover within the limit, fixed assets under ₦250 million and no professional services. Guides disagree on the limit: the Tax Administration Act says ₦100 million, the Nigeria Tax Act ₦50 million. At ₦50 million or less you are covered either way; between the two, confirm with your accountant or the NRS.