Nigeria VAT Calculator

Adding VAT and removing VAT are not the same sum

To add VAT, multiply the net price by one plus the rate. To remove it, divide the gross price by one plus the rate. The mistake people make is subtracting the rate instead of dividing by it, which gives an answer that is always slightly wrong and always in the tax authority’s favour.

The formulas

• Add VAT: gross = net × (1 + rate ÷ 100)
• Remove VAT: net = gross ÷ (1 + rate ÷ 100)
• VAT amount from a gross price: VAT = gross − (gross ÷ (1 + rate ÷ 100))

Why subtracting the rate is wrong

Take £120 at 20% VAT. Subtracting 20% gives £96, and the VAT would appear to be £24. Dividing by 1.20 gives £100, and the VAT is £20. The correct answer is £100, because the 20% was charged on the net price of £100, not on the gross price of £120. The gap is small on one invoice and material across a year of them.

VAT rates by country

These are the standard rates the calculator carries. Reduced and zero rates exist in most of these jurisdictions and are selectable in the tool where they apply.

The United States is the odd one out. There is no federal VAT; sales tax is set by state and often by county and city on top, and it is charged at the point of sale rather than through a reclaim chain. If you are billing a US client, use the custom rate field or charge nothing and let the client account for use tax.

Nigeria: 7.5% and the ₦25 million question

Nigeria’s VAT rate has been 7.5% since the Finance Act 2019 raised it from 5%. The Nigeria Tax Act 2025 left the rate alone but widened the list of zero-rated essentials.

When registration becomes mandatory

You must register once taxable supplies reach ₦25,000,000 over a twelve-month period. Below that, registration is optional — and the decision is commercial rather than administrative. Registering means adding 7.5% to your prices, which makes you look more expensive than unregistered competitors doing the same work. Against that, registration lets you reclaim the input VAT on what you buy.

What is not charged at 7.5%

• Zero-rated — you charge 0% but can still reclaim input VAT: basic food items, medical and pharmaceutical products, educational materials, and exports.
• Exempt — you charge nothing and cannot reclaim: most medical services, tuition from registered institutions, and certain financial services.
• Standard 7.5% — everything else, including nearly all professional services, consulting, software and general goods.

Returns are due by the 21st of the month following the month of supply. It is monthly, not annual, and the penalties accrue per month of delay.

Registration thresholds elsewhere

Thresholds move, and this is the detail most often out of date in online guides. Check with the relevant authority before acting, but as a starting point:

Getting VAT right on invoices

The calculation is the easy part. Where businesses get into trouble is the record-keeping around it, and there are three habits that prevent almost all of it.

1. Show VAT as its own line, never folded into the unit price. A client who cannot see the tax cannot reclaim it, and an auditor who cannot see it will assume you did not charge it.
2. Treat collected VAT as money you are holding, not revenue. Move it out of the operating balance if you can. The single most common cash-flow crisis in a small business is spending VAT that was always owed.
3. Apply the treatment per line, not per invoice. An invoice can legitimately carry standard-rated consulting and zero-rated educational material at the same time, and it must show both correctly.

This is also where automation earns its keep: a system that applies the right rate per line item and keeps the audit trail means the VAT return becomes a report rather than a reconstruction.