At Faturoti Taiwo and Co., we help Nigerian freelancers and independent professionals understand their tax obligations. One question we frequently hear is: “Do I need to charge and pay VAT as a freelancer?” The answer isn’t always straightforward – here’s everything you need to know about VAT for freelancers in Nigeria.
Who is Considered a Freelancer in Nigeria?
Freelancers (also called independent contractors or self-employed professionals) include:
Graphic designers Writers and editors Software developers Consultants Photographers Digital marketers
“Many freelancers don’t realize they’ve crossed the VAT threshold until FIRS contacts them – often with penalties.”
— Faturoti Taiwo, Lead Consultant
VAT Requirements for Nigerian Freelancers
When You MUST Register for VAT
You are required to register if:
Your annual turnover exceeds ₦25 million You provide services to VAT-registered businesses You work with international clients (certain cases)
When You DON’T Need to Register
Annual turnover below ₦25 million Providing exclusively VAT-exempt services (see below)
VAT-Exempt Services for Freelancers
These common freelance services do not attract VAT:
- Educational training
- Medical services
- Export services (services rendered to foreign clients)
- Artistic performances
How VAT Works for Freelancers (With Example)
Scenario:
- Freelance web developer (registered for VAT)
- Charges ₦500,000 for a project
Calculation:
- VAT = 7.5% of ₦500,000 = ₦37,500
- Client pays ₦537,500
- Developer remits ₦37,500 to FIRS
Step-by-Step VAT Registration Process
- Obtain TIN (Tax Identification Number)
- Complete VAT registration form
- Submit required documents:
- CAC registration (if incorporated)
- Bank statement
- Valid ID
- Await FIRS approval (Typically 2-4 weeks)
Pro Tip: Our firm handles VAT registration for freelancers in 7-10 working days.
5 Common VAT Mistakes Freelancers Make
- Not issuing VAT invoices (Required for registered freelancers)
- Mixing personal and business finances (Causes reconciliation issues)
- Late remittance (Attracts penalties)
- Incorrect calculations (Always 7.5% of invoice value)
- Not keeping proper records (Must maintain for 6 years)
Special Considerations for Freelancers
Digital Services to Foreign Clients
- No VAT charged
- Must keep records of foreign transactions
Working With VAT-Registered Companies
- They will expect you to be VAT-registered
- Can claim input VAT on your invoices
Multiple Income Streams
- Combine all freelance income when assessing ₦25m threshold
Penalties for Non-Compliance
Late registration: ₦50,000 + ₦25,000/month Late filing: ₦10,000 per month Underpayment: 10% of tax due + interest
How Faturoti Taiwo & Co. Helps Freelancers
Our Freelancer Tax Package (from ₦15,000/month) includes: VAT registration & filing Receipt tracking system Quarterly tax planning FIRS correspondence handling Expense optimization
Call (+234) 701-272-5021
thomas@faturotitaiwoandco.com
Get Free VAT Assessment
“Thanks to Faturoti Taiwo’s advice, I properly structured my freelance income and saved ₦2.8m in my first year.”
— Tola A., Lagos-based UX Designer