VAT in Nigeria: When Should Your Business Charge 7.5%?

The problem: VAT rules feel confusing

Many business owners are unsure when to add VAT and when to leave it off.

The safest approach is to understand if your business is VAT-registered and whether your goods or services are taxable.

Simple explanation

If your business is VAT-registered and you sell taxable goods or services, you should charge VAT on your invoices.

If your goods or services are exempt, you should not add VAT, but you still need good records.

• Charge VAT if you are registered and the supply is taxable
• Show VAT as a separate line item
• Keep VAT documentation for audits

Real business example

A marketing agency started charging VAT after registration but did not separate it on invoices, which confused clients.

Once VAT was clearly listed, payments and reconciliation became smoother.

Why this matters

Charging VAT incorrectly can lead to penalties or client disputes.

Clear VAT lines protect your business and help clients file their own returns.

A calm path forward

Use a system that separates VAT automatically and keeps a record of taxable and exempt invoices.

• Confirm your VAT registration status
• Set a default VAT rate where applicable
• Export VAT reports for your accountant