Small Business Value Added Tax (VAT) Registration in Nigeria

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Value Added Tax (VAT) was introduced into Nigeria’s tax system in 1993, since then, the VAT rate has increase from 5% to 7.5%. In this article, we will look at Small Business VAT registration in Nigeria.

What is Value Added Tax (VAT) ?

Value Added Tax (VAT),  is a tax imposed on goods or services at each stage of production. This is a Nigerian law that requires all businesses to register with the Federal Inland Revenue Service (FIRS). This means you will be required to pay taxes, file your annual returns and pay any outstanding balances owed from previous years.

VAT is not only an important part of the Nigerian economy but also a civic duty because it helps make life easier for businesses and consumers alike. The money collected from VAT goes directly into Nigeria’s economy, which helps support entrepreneurs and small business owners.

Why Do I Need to Register For VAT?

VAT is a compulsory tax that is payable on almost all goods and services in Nigeria and has fines attached for anyone who refuses to comply.

How Much Does it Cost to Register For VAT in Nigeria?

VAT registration in Nigeria is completely FREE. However, there are fines that one can incur as a result of late registration. For the first month after due date, the fine is N50,000 and then N25,000 for every month after that.

How Do Small Businesses Register for Value Added Tax in Nigeria?

The process of VAT registration is simple and can be done online. The process should normally take an average of about 5 working days but it is not unusual for it to linger to about 2 weeks.

The first step to completing the registration process is to fill out a form that you can download from the FIRS website. You must complete this form completely and return it to the relevant office within 30 days after receiving notification that your application has been approved by the government authorities who will now register your business under the VAT system.

When will I receive my VAT Certificate after registration?

The VAT certificate is often issued after the registration is completed.

It’s a proof of your registration, and it will be sent to you via email or post within one month of your registration.

What Happens if I Don’t Register for VAT?

The Nigerian government has recently made it mandatory for all small businesses to register with the state tax office before they can start trading their goods or services in Nigeria. This means that if you don’t register within 30 days of opening up shop, then you are liable to be fined and the amount of this fine will depend on how many months have passed since your business started operations.

For the first month after due date, the fine is N50,000 and then N25,000 for every month after that.

Final Thoughts

Small business owners should be conscious about the tax penalty and ensure they comply with the tax laws to avoid any disruption in their business.

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