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  • forced sales of goods in satisfaction of a debt;

  • certain activities in relation to the cessation of a business; and

  • withdrawal of goods for private or own use.

Exemptions and zero-rating

Exempt supplies

Exempt goods have no VAT levied on the final goods sold to the consumer. A registered supplier of exempt goods and services cannot claim input tax credits for VAT paid on the goods or services acquired to make exempt supplies, which include:

  • all exported services;

  • all medical and pharmaceutical products;

  • basic food items;

  • books and educational material;

  • baby products;

  • plant, machinery and goods imported for use in the EPZ or Free Trade Zone;

  • plant, machinery and equipment purchased for utilisation of gas in downstream petroleum operations;

  • fertilisers, tractors and ploughs, agricultural equipment and implements purchased for agricultural purposes;

  • medical services;

  • services rendered by community banks, people’s banks and mortgage institutions; and

  • plays and performance conducted by educational institutions as part of learning.



Zero-rated supplies

Zero-rated goods attract VAT at 0% on the final product, while any VAT paid on the input is claimable by the supplier. The following goods and services have been listed as zero-rated:

  • non-oil exports;

  • goods and services purchased by diplomats; and

  • goods and services purchased for use in humanitarian donor-funded projects.

Input tax

Input tax is the VAT charged on purchases by a registered person, including:

  • goods purchased, leased or otherwise acquired;

  • imported goods; and

  • services acquired by a registered person.

Input tax allowed

VAT incurred as input VAT may be deducted from output VAT only in respect of:

  • goods purchased or imported directly for resale; and

  • goods constituting the stock in trade, used directly for the production of a new product on which output VAT will be charged.

Input tax expressly denied

The following are not allowed for deduction as input VAT:

  • VAT incurred on overheads, service and general administrative cost of any business – such VAT is expensed to the profit and loss account together with the costs to which they relate; and

  • VAT on any capital item or asset – such VAT is capitalised along with the cost of the capital item or asset to which they relate.

Partial exemption

Any VAT incurred on the acquisition of goods that cannot be wholly attributed to the making of taxable supplies will be reclaimable as input VAT in part only. The apportionment of input tax that can be claimed is determined by reference to the level of taxable use or consumption of the goods and subject to the normal rules for deducting input tax.



VAT is payable on the importation of all goods, whether or not the importation is subject to customs duty or excise duty. Import VAT is payable to the Nigerian Customs Service before the import can be cleared for home consumption.

Goods entered into a bonded warehouse or an excise warehouse will not be recognised as imported goods until such goods are removed from the warehouses and entered for home consumption.

Goods entered for transshipment, export or re-export in accordance with the Export Processing Zone Act are not liable for VAT.

VAT on importation is calculated by applying VAT at the rate of 5% to the sum of the customs value of the goods plus any customs duty and excise duty payable on the goods.

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