VALUE ADDED TAX IN NIGERIA {VAT}: ALL YOU NEED TO KNOW

VALUE ADDED TAX IN NIGERIA { VAT }: ALL YOU NEED TO KNOW

Value Added Tax simply regarded as VAT is the tax levied on the supply of goods and services which is eventually borne by the final consumer of that good or service but collected at each stage of the production and distribution line. { Value added tax in Nigeria } The standard VAT rate in Nigeria is 5% invoice value of goods and services except of course on items exempted or zero-rated VAT goods. The Federal Government arm responsible for administering this is the Federal Inland Revenue SERVICE (FIRS). Under the law, all suppliers of goods and services, distributors, importers and manufacturers are to completely register for it and obtain a permanent VAT registration number.

VAT REGISTRATION

Every taxable person should register within 6 months of commencement of his/her business. Aside individuals, government ministry statutory body and other agency of government shall register as agent of the Board and all government ministries under the law shall register as an agent of the board. This is to facilitate the collection of the tax according to the act.

Not only the above, all contractor transacting business with a government ministry or statutory body and other agency of federal government, state government or local government shall produce evidence of registration with the Board as a condition for obtaining a contract.

For non-Nigerian residents, they shall register using the address of their business partner with their consent.

VATABLE GOODS and SEVICES in Nigeria

All goods are by law vatable except the ones specifically exempted. These vatable goods includes both the local goods as well as the imported goods, non are exempted from VAT. For imported goods, VAT is paid irrespective of the amount paid as custom duties and whether the importer is registered for VAT or not. An imported service is vatable provided it is rendered to a Nigerian.

GOODS / SEVICES EXEMPTED FROM VAT

The goods exempted from VAT in Nigeria are; medical and pharmaceutical products, fertilizer, books and educational materials, Baby products, locally produced agricultural and veterinary medicine, farming transportation equipment, farming machinery, basic food items, Plants and machinery imported for processing export goods

Services exempted includes; medical services, Services rendered by Mortgage institutions, Community Banks and Peoples Banks.

RECORDS OF BUSINESS

Under the act, any taxable individual / organisation shall keep the records of all business transactions related to the taxable goods / services that would enable the board determine the correct tax amount.

OFFENCES UNDER THE ACT on Value Added Tax in Nigeria

Taxes are one of the important ways in which the government generates revenue and as such, they take it serious with anyone that commit an act contrary to the law some of these are listed below :

• Failure to register
• Evading tax
• Fake documents
• Wrong address or failure to notice the board of a change of address
• Issuing tax invoice by unauthorized person
• Resisting authorised officers
• Failure to issue tax invoice
• Failure to keep proper books and accounts

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Tags: value added tax in Nigeria , vatable goods and services in Nigeria , vat rate in Nigeria , vat in Nigeria