How do I charge VAT in Nigeria?

How is VAT charged in Nigeria?

It is a tax that is charged on the value which a citizen derives from the purchase of goods and services as against a tax that is charged on the income of a citizen. … The current rate of VAT in Nigeria is 7.5 percent of the total value of the goods or services purchased.

What is the current VAT rate in Nigeria 2020?

The rate of value added tax (VAT) in Nigeria increased from 5% to 7.5%. The Finance Act, 2019, signed by the president and effective on 13 January 2020, included the VAT rate change.

How do you charge VAT on an invoice?

What you must do when charging VAT

  1. charge the right rate of VAT.
  2. work out the VAT if a single price is shown that includes or excludes VAT.
  3. show the VAT information on your invoice.
  4. show the transaction in your VAT account – a summary of your VAT.
  5. show the amount on your VAT Return.
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What percentage is VAT?

VAT is an indirect tax which means the end consumer is being charged for the tax. In the Philippines, the rate of VAT is at 12% except for export sales and other zero-rated sales which is at 0%.

Do small businesses pay VAT in Nigeria?

Although the FG increased VAT – a consumption tax on the “value-added” to the product throughout its production process – to 7.5 percent from 5 percent, companies with turnover of N25 million or less were exempted from filing VAT returns and Company Income Tax (CIT). Others above this threshold aren’t exempted.

What should I charge VAT on?

You must account for VAT on the full value of what you sell, even if you: receive goods or services instead of money (for example if you take something in part-exchange) haven’t charged any VAT to the customer – whatever price you charge is treated as including VAT.

Is VAT chargeable on rent in Nigeria?

For VAT to be chargeable, the transaction must qualify as a supply of goods or service. … Rent derived from lease of real properties, whether for residential or commercial purposes, is not a supply of goods or services and is therefore not liable to VAT.

What are the new rules on VAT?

From 1st March 2021, VAT-registered subcontractors will no longer charge VAT on certain construction services to another VAT-registered business. Instead, the customer will ‘self-account’ for any VAT due – this is known as the Reverse Charge.

How do I calculate 7.5 VAT?

  1. Calculate the Gross Amount: Formula: Gross Amount = Net Amount + VAT Rate × Net Amount. Calculation: Gross Amount = 545 + 7.5% × 545 = (1 + 7.5%) × 545 = (100% + 7.5%) × 545 = …
  2. Calculate the Added Tax Amount: Formula: Added Tax Amount = Gross Amount – Net Amount. Calculation: 585.875 – 545 = 40.875 ≈ 40.88.
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Is it illegal to charge VAT if not registered?

You must not charge VAT if your business is not registered for VAT. … The penalty can be up to 100% of the VAT shown on the invoice. There is a minimum penalty of 10% of the VAT even if there is an unprompted disclosure to HMRC of a careless mistake, as distinct from deliberate and concealed conduct.

Do I charge VAT to US customers?

You will not need to charge VAT. Your UK VAT-registered business is selling services to a US individual (non-business) that is not considered one of the special exception services. The place of supply would be the UK, and you would charge VAT.

Should I charge VAT on my invoice?

VAT is normally added to the price of the goods or services on your invoice. Your VAT identification number must be shown on all invoices you give to customers, as well as the amount of VAT being charged and other standard items.

How is VAT calculated?

VAT-inclusive prices

To work out a price including the standard rate of VAT (20%), multiply the price excluding VAT by 1.2. To work out a price including the reduced rate of VAT (5%), multiply the price excluding VAT by 1.05.

What is the VAT rate 2020?

This cut in the VAT rate from the standard rate of 20% will have effect from 15 July 2020 to 31 March 2021. These changes are being brought in as an urgent response to the coronavirus (COVID-19) pandemic to support businesses severely affected by forced closures and social distancing measures.

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Who pays VAT buyer or seller?

The seller, while selling a product (which is a Finished Good for him) charges VAT from the buyer at the specified rate given in the respective State VAT Act, which he pays to the respective State Government. The buyer, if he is a final consumer comsumes the good and ends up paying the amount of VAT.

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