This post falls under VAT, WHT & Compliance and explains how Value Added Tax (VAT) and Withholding Tax (WHT) work under Nigeria’s 2026 tax law, without confusion or fear.
If you sell goods, provide services, issue invoices, or receive payments in Nigeria, this affects you.
What Is VAT Under Nigeria’s 2026 Tax Law?
VAT (Value Added Tax) applies to taxable goods and services in Nigeria.
- VAT rate: 7.5%
- VAT collected is not your income
- You are only a collector on behalf of government
VAT Registration Threshold (VERY IMPORTANT)
You must register for VAT only if:
- Your yearly sales are above ₦25 million
If your sales are:
- Below ₦25 million → ❌ Do NOT charge VAT
- Above ₦25 million → ✅ Must register and charge VAT
Charging VAT without registration is wrong.
Output VAT Explained Simply
Output VAT is the VAT you collect from customers when you sell.
Example:
- Service price: ₦100,000
- VAT (7.5%): ₦7,500
- Customer pays: ₦107,500
The ₦7,500 is Output VAT.
It is not your money.
Input VAT vs Output VAT (VERY IMPORTANT)
Input VAT
- VAT you paid on business expenses
Output VAT
- VAT you collected from customers
How They Work Together:
Output VAT – Input VAT = VAT to remit
Example:
- Output VAT: ₦50,000
- Input VAT: ₦20,000
- VAT to remit: ₦30,000
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VAT Remittance Deadline
- VAT must be remitted by the 14th of the next month
- There is no daily VAT fine in the law
VAT is remitted monthly, not daily.
What Is Withholding Tax (WHT)?
Withholding Tax is NOT extra tax.
It is:
- An advance payment of tax
- Credited when you file your final tax return
Applies to:
- Rent
- Contracts
- Professional services
- Dividends
- Interest
Example:
- Invoice: ₦1,000,000
- WHT deducted: ₦50,000
- You receive: ₦950,000
The ₦50,000 is credited to you, not lost.
If WHT credits are missing, you may be overpaying tax.
👉Taxify helps you recover and apply WHT credits.
Common VAT & WHT Myths (NOT TRUE)
The law does NOT say:
- VAT is extra income
- VAT is deducted from bank alerts
- Government fines people daily
- VAT is charged automatically
Only what is written in the Act is law.
Final Word on VAT & Compliance
VAT and WHT are simple when done correctly:
- Charge only when qualified
- File on time
- Keep records
Fear-based compliance causes mistakes. Facts prevent them.