What are VAT-able goods?All goods manufactured/assembled in or imported into Nigeria, except those specifically exempted under the law. Examples of VAT-able goods include jewelries, shoes, bags, television etc.
What are VAT-able Services?All services rendered by any person in Nigeria except those specifically exempted under the law. Examples of VAT-able services are, services rendered by Lawyers, Engineers, Accountants, Contractors and Consultants etc.
What are exempted goods under Value Added Tax (VAT) Act?Exempted goods are those goods which are not subject to VAT.
- All medical and pharmaceutical products;
- Basic food items;
- Books and Educational materials;
- Baby products;
- Fertilizer (locally produced), agricultural and veterinary medicine, farming machinery and farming transportation equipment;
- Plant and Machinery imported for use in the Export Processing Zone or Free Trade Zone; provided that 100% production of such company is for export
- All commercial Aircraft and Aircraft spare parts imported for use in Nigeria
- Amorphous Pet Chips (H S Code 3907.6000.00)
What are exempted services under VAT Act?Exempted services are services that are not VAT-able, i.e. not subject to 5% VAT. These include:
- Medical services
- Services rendered by Community Banks,
- People’s Banks and Mortgage Institutions,
- Plays and performance conducted by the educational institutions as part of learning.
- All exported services
What is Zero-rated VAT?Zero-rated VAT means whereas the goods and services are VAT-able, the applicable rate is zero percent (0%).
Which transactions are zero-rated?The following transactions are zero-rated. There are:-
- Non-oil exports
- Goods and Services purchased by Diplomats
- Goods and Services purchased by humanitarian donor-funded projects
What is the due date of filing VAT Returns?The due date for filing VAT is 21st day of every month following month of transaction
When a contractor/supplier supplies goods that are exempted from VAT, should VAT be paid?Goods exempted from VAT are not VAT-able.
Are entertainment services VAT-able?Yes. They are VAT-able services except as contained in the exempted services list.
Are catering services VAT-able?Yes. Catering services are VAT-able.
Can Ministries, Departments and Agencies (MDAs) exempt foreign investors from paying VAT?No. Ministries do not have statutory power to exempt a taxpayer from payment of tax or to amend the tax laws.
Who is a VAT-able Person?A VAT-able person under Value Added Tax Act (VATA) Cap VI LFN 2004 is “a person (other than a Public Authority acting in that capacity) who independently carries out in any place an economic activity as a producer, wholesaler, trader, supplier of services (including mining, and other related activities) or person exploiting tangible or intangible property for the purpose of obtaining income by way of trade or business”.
In other words, a VAT-able person is one who trade in VAT-able goods and services for a consideration.
Is it compulsory for a VAT-able person to register for VAT?Every VAT-able person has an obligation to register for VAT payment.
Who is a VAT Agent?VAT AGENT: – Are agents of Revenue Collection with regards to Value Added Tax. They facilitate the deduction and remittance of VAT to the Revenue Office e.g. Ministries/Government Agencies/Parastatals and Oil companies
Is VAT registration for individuals or corporate bodies?It is for all so long as they are trading on goods and services as defined by law.
What are the penalties for non - registration of VAT?Failure or refusal to register with the Board within the specified time. The taxpayer shall be liable to a penalty of N10, 000 for the first month in which the failure occurs and
N5, 000 for each subsequent month in which the failure continues. If this persists, the premises where the business is carried on shall be sealed up.
What are the penalties for non - deduction of VAT?Non deduction or failure to collect tax by a taxable person attracts a penalty of 150% of the uncollected tax plus 5% interest above the CBN’s discount rate.
What are the penalties for non – remittance of VAT?Failure to remit tax shall attract a penalty of a sum equal to 5% per annum plus interest at a commercial rate payable within 30 days of notification by the Tax Authority
Why is VAT on certain goods and services paid in foreign currency?Taxes are to be paid in the currency of transaction.
Should Ministries issue contractors with receipts for VAT payment in place of KWIRS receipt?No. Receipt acknowledging payment of VAT is only issued by FIRS.
Most times organizations make part payment to contractors. When should VAT be deducted?For any payment made, the corresponding VAT should be deducted and remitted.
Does FIRS grant refund on VAT to non-citizen who is leaving the country?Section 23 of FIRS Establishment Act allows for refunds. Goods consumed in the country for which VAT was paid is not refundable.
How is VAT on goods sold treated?VAT element on goods sold is deducted and remitted to the FIRS through any of the approved collecting bank on or before the 21st day of the month following the month of sales.
What does “VAT Inclusive” mean?VAT inclusive means that VAT is already included in the cost of transaction (i.e. goods and services contract). However, the term is being discouraged as it is always advised that VAT be isolated and not included as part of the total invoice value.
Some contractors charge 10% for VAT. Is it allowable?No. The 10% charged on VAT is wrong. The Correct rate is 5%. The contractor should not assume 10% to mean 5% for VAT and 5% for WHT. The two should be treated separately. WHT is deduct from the contract sum and therefore paid by the contractor, while VAT is paid as an addition to the contract sum by the consumer of the goods/services.
What is input VAT?Input VAT is VAT paid on raw materials or goods and services used for production purposes or goods for resale or goods imported directly for resale.
What is output VAT?Output VAT is VAT charged by taxable persons on goods and services supplied. Where output VAT is more than the Input VAT, the difference is paid to FIRS, but where Input VAT is more than output VAT, the taxable person claims a refund.