How to Calculate VAT in Nigeria (7.5%) — With Simple Examples

Value Added Tax (VAT) in Nigeria is charged at 7.5%on most goods and services. If your business is registered for VAT, you add it to your prices, collect it from customers, and remit it to the Federal Inland Revenue Service (FIRS). Here's how to calculate it correctly — with simple examples.

The current VAT rate in Nigeria

VAT is 7.5% (it rose from 5% in 2020). It applies to most sales, with some items zero-rated or exempt (for example, basic food items, medical and pharmaceutical products, and tuition). When in doubt, check the FIRS list or ask your accountant.

How to add VAT to a price

To add VAT to a price that does not yet include it, multiply by 7.5%:

1. Item price: ₦10,000
2. VAT = ₦10,000 × 7.5% = ₦750
3. Total the customer pays = ₦10,750

How to find VAT inside a price that already includes it

If a price is "VAT-inclusive" (the ₦10,750 already contains VAT), work backwards by dividing by 1.075:

1. VAT-inclusive total: ₦10,750
2. Price before VAT = ₦10,750 ÷ 1.075 = ₦10,000
3. VAT portion = ₦10,750 − ₦10,000 = ₦750

Input VAT vs output VAT

• Output VAT — the VAT you charge customers on your sales.
• Input VAT — the VAT you pay suppliers on your business purchases.

What you remit to FIRS is usually output VAT minus input VAT. So keeping records of the VAT on your purchases can reduce what you owe.

When and how to file

VAT returns are filed monthly — on or before the 21st of the month following the sale. Late filing attracts penalties, so keeping clean monthly records is the easiest way to stay safe.

This article is general information, not tax advice. Confirm specifics with FIRS or a qualified accountant for your business.