
Value Added Tax (VAT) is a crucial part of doing business in Nigeria, yet many entrepreneurs struggle with compliance. At Faturoti Taiwo and Co., we help Lagos businesses navigate VAT regulations effortlessly. This guide breaks down everything small business owners need to know about VAT in Nigeria.
What is VAT in Nigeria?
VAT is a 7.5% consumption tax applied to goods and services at each production and distribution stage. The Federal Inland Revenue Service (FIRS) administers VAT, which affects:
Goods produced or sold in Nigeria
Services rendered within Nigeria
Imported goods and services
Who Needs to Register for VAT?
You must register for VAT if your business: Has an annual turnover of ₦25 million or more
Sells taxable goods/services (see exceptions below)
Operates as a corporate entity or partnership
“Many small businesses don’t realize they’ve crossed the VAT threshold until FIRS contacts them. Proactive registration saves penalties.”
— Faturoti Taiwo, Lead Consultant
VAT-Exempt Goods & Services
Not everything attracts VAT. Key exemptions include:
- Basic food items (rice, beans, flour)
- Medical and pharmaceutical products
- Educational materials/books
- Agricultural equipment
- Exported goods/services
How VAT Works: Simple Example
- Supplier A sells materials to Manufacturer B for ₦100,000 + ₦7,500 VAT
- Manufacturer B charges ₦200,000 + ₦15,000 VAT to Retailer C
- Retailer C pays only ₦7,500 to FIRS (₦15,000 output VAT minus ₦7,500 input VAT)
VAT Compliance Requirements
Registered businesses must: File monthly VAT returns by the 21st of the following month
Remit VAT collected to FIRS
Keep proper records for 6 years
Issue VAT invoices showing TIN
Common VAT Mistakes to Avoid
Late filing (attracts penalties + interest)
Underreporting sales (risks audits)
Mixing exempt/non-exempt transactions
Using unapproved invoicing formats
How Faturoti Taiwo and Co. Simplifies VAT for You
We help Lagos businesses: Determine VAT registration requirements
Automate VAT calculations with cloud accounting
File accurate returns before deadlines
Claim input VAT refunds efficiently
Handle FIRS audits professionally
VAT FAQs for Small Businesses
Q: Can I register voluntarily if my turnover is below ₦25m?
A: Yes! Voluntary registration builds credibility with corporate clients.
Q: What’s the penalty for late VAT filing?
A: ₦50,000 for the first month + ₦25,000 for subsequent months.
Q: How do I handle VAT for e-commerce?
A: Digital products/services follow the same 7.5% VAT rule.
Take the Stress Out of VAT Compliance
Don’t let VAT complexities distract you from growing your business. Faturoti Taiwo and Co. provides:
VAT registration assistance
Monthly filing services
FIRS dispute resolution
Customized VAT training for your team
Call today: (+234) 701-272-5021
Email: thomas@faturotitaiwoandco.com
Visit: https://faturotitaiwoandco.com
Stay compliant, focused, and financially smart—let’s handle VAT together!