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

Nigeria’s VAT rate is 7.5%. That one number hides four separate skills: adding it to a price, working out how much of a VAT-inclusive figure is tax, knowing which of the VAT you paid you can take back, and putting the right things on the invoice so your customer can do the same. Each is below, with the numbers worked through.

Adding VAT to a price

Multiply the net amount by 1.075, or by 0.075 to get the VAT alone.

Removing VAT from a gross price

Divide the gross by 1.075 to get the net. The VAT is the difference. The mistake almost everyone makes once is to take 7.5% off the gross: on ₦215,000 that gives ₦198,875, not ₦200,000, and the error compounds across a year of returns.

The VAT calculator does both directions and shows the three figures separately.

Output VAT, input VAT and what you actually pay

Output VAT is what you charge customers. Input VAT is what suppliers charge you on things you buy for the business. Each month you pay the NRS the difference. If input exceeds output — common for a business that has just bought equipment — the excess is carried forward or refunded.

A bakery sells ₦3,000,000 of cakes in a month and charges ₦225,000 of VAT. It buys ₦1,200,000 of flour, packaging and a new oven and pays ₦90,000 of VAT on them. It remits ₦135,000. Before the Nigeria Tax Act 2025, the VAT on the oven and on services was generally not recoverable; the Act extended input recovery to services and fixed assets, so the ₦90,000 is now fully claimable. That change is worth more to most small businesses than any rate cut would have been.

What a valid VAT invoice must show

Your customer can only recover input VAT on an invoice that carries:

• Your business name, address and Tax Identification Number.
• The customer’s name and, for business customers, their TIN.
• An invoice number and date.
• A description of each supply, with the net amount per line.
• The VAT rate applied to each line and the VAT amount, shown separately from the net.
• The gross total.

Zero-rated and exempt lines are shown with their treatment rather than omitted. As NRS e-invoicing rolls out, invoices will additionally need the NRS reference, so building them in software rather than Word is becoming the default.

Zero-rated, exempt, and why it matters

Registration and filing

• Threshold: taxable supplies above ₦25,000,000 in twelve months. Below it you do not register and must not charge VAT.
• Where: the Nigeria Revenue Service, using your TIN.
• When: returns and payment by the 21st of the following month, including nil returns.
• Penalties: a fixed penalty for each month a return is late, plus interest on unpaid VAT.

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This is general information, not tax advice. Portals, forms and thresholds change as the Nigeria Revenue Service and the Joint Revenue Board settle into the new law. Confirm your position with a licensed tax adviser before you rely on it.