VAT(VALUE ADDED TAX ) IN NIGERIA
WHAT IS VAT?
VAT is a tax on value added on goods and services.
The value added on a product is the output value minus the input cost.
Value added tax has been successful in many countries.
It has been challenging especially in the area of international online business.
Recently some countries has asked online vendors to register for VAT in the country of buyer.
The value added on a product is the output value minus the input cost.
Value added tax has been successful in many countries.
It has been challenging especially in the area of international online business.
Recently some countries has asked online vendors to register for VAT in the country of buyer.
current Vat rate-7.5%
VAT PENALTY
Below are some VAT penalties in Nigeria.
- FAILURE TO REGISTER FOR VAT
According to VAT Act 1993 as amended
1.A taxable person shall, within six months of the commencement of the Act, or six months of the commencement of business, whichever is earlier register with Firs
2.A taxable person who fails or refuses to register within the specified period shall be liable to N50,000 for the first month and N25,000 for each of the subsequent month in which the failure occur.
- FAILURE TO REMIT TAX.
1 . Failure to remit tax within the specified periods-a sum equal to 5 per cent plus interest at the commercial rate of the amount of tax remit table plus tax payable.
- CHANGE OF ADDRESS.
Failure to notify FIRS on the change of address within one month of the change, is liable to pay a penalty of N50,000 for the first month and N25,000 for each subsequent months the failure continues.
- FAILURE TO ISSUE A TAX INVOICE FOR GOODS OR SERVICES
Guilty of an offence and liable on conviction to a fine of 50 per cent of the cost of goods or services for which the invoice was not issued.
- FAILURE TO KEEP PROPER RECORDS AND ACCOUNTS.
-2,000 for every month it continues.
- FAILURE TO COLLECT TAX.
Penalty of 150 per cent of the amount not collected, plus 5 per cent interest above CBN rediscount rate.
- FAILURE TO SUBMIT RETURNS.
N50,000 for the first month N25,000 for each subsequent month in which the failure occur.
- PENALTY CONTINUES -see VAT ACT 1993 as amended till date.
According to VAT ACT 1993 as amended.
Good and services exempted from Vat in Nigeria.
Good and services exempted from Vat in Nigeria.
1.All medical and pharmaceutical products.
2.Basic food items.
3.Books and educational materials.
4.Newspaper and magazines.
5.Baby products.
6.commercial vehicles and commercial vehicle spare parts.
7.Fertilizer, agricultural and veterinary medicine, farming machinery and farming transportation equipment.
8.All exports.
Services Exempted.
1.medical services.
2.Services rendered by community banks, people’s banks and mortgage institutions.
3.Plays and performances conducted by educational institutions as part of learning.
4.All exported services.
2.Basic food items.
3.Books and educational materials.
4.Newspaper and magazines.
5.Baby products.
6.commercial vehicles and commercial vehicle spare parts.
7.Fertilizer, agricultural and veterinary medicine, farming machinery and farming transportation equipment.
8.All exports.
Services Exempted.
1.medical services.
2.Services rendered by community banks, people’s banks and mortgage institutions.
3.Plays and performances conducted by educational institutions as part of learning.
4.All exported services.
ZERO RATED goods and services.
1.Non-oil exports .
2.Goods and services purchased by diplomats
3.Goods purchased for in humanitarian donor funded project.
1.Non-oil exports .
2.Goods and services purchased by diplomats
3.Goods purchased for in humanitarian donor funded project.
Imported goods are liable to vat except for items exempted by the VAT act.
FINANCE ACT RECENTLY EXEMTED BUSINESS WITH TURNOVER OF 25,000,000NGN AND BELOW.
Disclaimer: Obi Azubuike is not by this publication acting as a professional advisers and therefore not liable to any damage whatsoever for your acting or refraining to act based on this publication. Consult your professional for advice.