Zero-rated, exempt or small business: which pays no VAT?
Three different things get called “VAT-free”. They are not the same, and the difference decides whether you can reclaim the VAT you pay on costs.
Standard-rated
7.5%- Customer pays
- 7.5% VAT on top
- You reclaim input VAT
- Yes
- Register and file
- Yes
Zero-rated
0%- Customer pays
- No VAT
- You reclaim input VAT
- Yes
- Register and file
- Yes, and show the sale
Exempt
None- Customer pays
- No VAT
- You reclaim input VAT
- No
- Register and file
- For other taxable sales
Small business
No duty- Customer pays
- No VAT, unless you opt in
- You reclaim input VAT
- No
- Register and file
- Not required
Zero-rated supplies (0% VAT)
Under the Nigeria Tax Act 2025 these supplies are taxable at 0%. Sellers still count them on the VAT return and can reclaim input VAT. Many of these used to be exempt, so older articles are out of date.
Food and farming
Health
Education
Electricity
Exports
VAT-exempt supplies
These carry no VAT, and the seller cannot reclaim input VAT on the costs of making them.
Property and money
Energy
Households
Transport and farming equipment
Government, aid and zones
Edge cases differ between advisers. Items such as electric vehicles and some financial fees are treated differently in published guidance. Confirm with the NRS or a tax adviser before you rely on an exemption for a large transaction.
Which industries and businesses pay no VAT?
If you must charge VAT: what to do
- Get your Tax IDIndividuals use their NIN and businesses their CAC number. Check yours or register one.
- Register for VATWith the NRS, once you pass the small-business limits, or earlier if you opt in.
- Charge the right rate7.5%, 0% or no VAT line on each invoice, with your Tax ID. Our invoice generator sets VAT per line.
- Keep purchase invoicesYou can only reclaim input VAT backed by a valid VAT invoice.
- File and pay monthlyEstimate it with the VAT payable calculator, then file on the NRS portal by the due date.
Frequently asked questions
What is the VAT rate in Nigeria in 2026?
7.5%. The Nigeria Tax Act 2025, in force from 1 January 2026, kept the rate at 7.5%. It replaced the old VAT Act.
How do I calculate VAT in Nigeria?
To add VAT, multiply the price before VAT by 7.5%, then add it on: ₦100,000 becomes ₦107,500. To remove VAT from a price that already includes it, multiply by 7.5 and divide by 107.5: ₦107,500 contains ₦7,500 VAT.
What is the difference between zero-rated and exempt?
Both mean the customer pays no VAT. With zero-rated supplies the seller still counts the sale for VAT at 0% and can reclaim input VAT on costs. With exempt supplies the seller is outside the VAT system for that supply and cannot reclaim input VAT. Many items that used to be exempt (basic food, medicines, school tuition) are now zero-rated, so older articles are out of date.
Is VAT charged on food, school fees and medicines?
No. Basic food items, medical and pharmaceutical products, medical services and tuition from nursery to tertiary level are zero-rated under the Nigeria Tax Act 2025, so customers pay no VAT on them.
Do small businesses charge VAT?
A small business is not required to register for VAT, charge it, file returns or remit it. Under the Act and the Nigeria Tax Administration Act, a small business has annual turnover of ₦100 million or less and fixed assets of ₦250 million or less. Providers of professional services are not covered. A small business may opt in by written notice. Some older guides quote ₦25 million, which was the former small-company limit for company income tax.
Do I charge VAT on exports?
Exported goods (other than oil and gas), exported services and exported incorporeal property are zero-rated. You charge 0% and can reclaim input VAT. Oil and gas exports are exempt.
Is VAT charged on rent or buying land?
Supplies of land or buildings and interests in them are exempt from VAT under the Nigeria Tax Act 2025. Check how it applies to your lease with a tax adviser.
When are VAT returns due?
VAT-registered businesses file a return every month. Sources give the 21st of the following month as the due date. Confirm the current date on the NRS portal before you file.
Sources and last verified date (7 November 2026)
The VAT rate, the zero-rated and exempt lists and the small-business limits follow the Nigeria Tax Act 2025 and the Nigeria Tax Administration Act 2025 (in force 1 January 2026). Checked against: