AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Under the Nigeria Tax Act 2025, medical services and products are listed among zero-rated supplies for VAT, so a clinic does not add VAT to patient bills, though other sales may be treated differently. The clinic must still run PAYE on staff salaries, remit pension (at least 10% employer, 8% employee), and keep books for at least six years.
A clinic's money moves in more directions than most small businesses: cash patients, HMO capitation, fee-for-service claims, a pharmacy counter, laboratory referrals, and a payroll of doctors, nurses and support staff. Good books keep these apart. This guide covers the records, the VAT position and the payroll taxes, as information rather than tax advice; check your own case with a tax adviser or the Nigeria Revenue Service (NRS).
The books a clinic should keep
The Nigeria Tax Administration Act 2025 (s.31) requires every person, including exempt persons, to keep books and records that show enough about every relevant transaction to work out tax, in English, for not less than six years after the year of assessment. For a clinic that means:
- Income by stream: cash and transfer patients, each HMO's capitation, each HMO's fee-for-service claims, pharmacy counter sales, and any other income such as medical reports.
- Receivables: claims submitted and unpaid, by HMO and age.
- Stock: drugs and consumables bought, issued and on hand.
- Expenses: salaries, locum fees, rent, power and diesel, waste disposal, equipment servicing, with receipts.
- Payroll: gross pay, PAYE, pension, other deductions and net pay for each staff member, each month.
- Fixed assets: equipment, with cost and date, for capital allowances.
Keep patient clinical notes and financial records linked by an invoice or visit number, but store them separately; your accountant does not need clinical detail. For a simple ledger layout, see bookkeeping for small businesses.
VAT: zero-rated is not the same as exempt
Many clinic owners describe medical services as "VAT-exempt". Under the Nigeria Tax Act 2025, section 187 lists medical services and products among zero-rated supplies, alongside tuition and basic food, according to a Mondaq analysis of the Act (May 2026). The VAT rate itself stays at 7.5% for standard-rated supplies.
- Zero-rated
- VAT is charged at 0%. The supply is still within the VAT system, which generally means related input VAT may be recoverable.
- Exempt
- The supply is outside VAT altogether, which generally means input VAT on related costs cannot be recovered.
The practical point: if your clinic is registered for VAT, zero-rating can allow you to reclaim VAT paid on costs used for those supplies. Forvis Mazars (March 2026) notes that from 1 January 2026 input VAT can be claimed on services and fixed assets used for taxable supplies, with claims made within five years. How NRS applies this to a particular clinic is worth confirming before you file. Not everything a clinic sells is necessarily medical: a café, cosmetic retail or room rental may be standard-rated. Keep those sales on their own lines.
Small businesses (turnover of ₦100 million or less and fixed assets of ₦250 million or less) are exempt from VAT registration and filing under the 2025 Act, but Forvis Mazars notes that professional service providers are excluded from that definition. Whether a given clinic is treated as a professional service provider is a question to put to your adviser.
Company income tax
If the clinic is a limited company, section 11(1) of the Nigeria Tax Administration Act 2025 requires every company to file a self-assessment return each year, whether or not it owes tax. Small companies have reliefs under the reforms; see small company tax under the Nigeria Tax Act 2025 for what counts as small and what the reliefs are.
PAYE and pension for clinic staff
Under the Nigeria Tax Act 2025, effective 1 January 2026, the first ₦800,000 of annual taxable income is taxed at 0%, the next ₦2.2 million at 15%, the next ₦9 million at 18%, the next ₦13 million at 21%, the next ₦25 million at 23%, and anything above ₦50 million at 25%; minimum-wage earners are exempt (DLA Piper, August 2026). Pension and NHF contributions are deductible before tax (Mondaq, January 2026).
Worked example: a nurse on ₦3,000,000 a year
This is an example. It assumes the whole salary is pensionable and ignores rent relief and NHF for simplicity.
| Step | Amount |
|---|---|
| Gross annual pay | ₦3,000,000 |
| Employee pension at 8% | ₦240,000 |
| Taxable income | ₦2,760,000 |
| First ₦800,000 at 0% | ₦0 |
| Next ₦1,960,000 at 15% | ₦294,000 |
| Annual PAYE | ₦294,000 |
| Monthly PAYE | ₦24,500 |
The clinic deducts ₦24,500 PAYE and ₦20,000 employee pension each month and adds its own 10% employer pension (₦25,000). Pension is remitted to the employee's PFA within seven working days of paying salary (ThisDay on the Pension Reform Act). For PAYE, the 2025 Act runs penalties from after the 21st of the following month, while some guidance still gives the 10th; paying by the 10th is the safe course, and your state Internal Revenue Service can confirm its date. Section 14(1) of the Act sets the employer's annual return deadline as 31 January.
Locum doctors
Doctors paid per session are often not employees. If the clinic is a company paying a locum's professional fees, withholding tax on professional fees may apply; check the current rate with your adviser. Agree in writing whether a locum is an employee or a contractor; the tax treatment follows the real relationship, not the label.
What to check first
- Is every income stream recorded separately, including each HMO?
- Are any non-medical sales mixed into medical income?
- Is PAYE being deducted for every employee above the minimum wage, and remitted monthly?
- Is pension remitted within seven working days, with schedules kept?
- Are six years of records stored where you can find them?
Related reading: clinic billing and HMO claims and PAYE tax bands for 2026.
Where Pryme fits
A Pryme Business Account includes Payroll and a Compliance agent that prepares filing and remittance reminders. Agents prepare the work; a person approves anything above the ceiling you set, and every action is recorded.
Questions people ask
Do private hospitals pay VAT in Nigeria?
Medical services and products are listed as zero-rated under the Nigeria Tax Act 2025, so VAT is not added to patient bills for them. Other sales by the clinic may be standard-rated at 7.5%. Confirm your position with NRS or an adviser.
Is medical service VAT exempt or zero-rated?
Under section 187 of the Nigeria Tax Act 2025, medical services and products are listed among zero-rated supplies. Zero-rated supplies stay in the VAT system at 0%, which differs from exemption.
How much pension should a clinic pay for staff?
Under the Pension Reform Act, employers contribute at least 10% and employees at least 8% of monthly emoluments, remitted to the employee's PFA within seven working days of paying salary.
When is PAYE due for clinic staff?
The Nigeria Tax Administration Act 2025 runs penalties from after the 21st of the month following payment, while some guidance still gives the 10th. Paying by the 10th is the safe course; confirm with your state IRS.
Sources
- Mondaq: Examination of the VAT provisions under the Nigeria Tax Act 2025 (28 May 2026) · accessed Oct 2026
- Forvis Mazars: 2025 NTA, VAT key business changes (16 Mar 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- DLA Piper Africa: FAQs on payroll taxes and employer liability (28 Aug 2026) · accessed Oct 2026
- ThisDay: CPS, what you should know about employees' rights (20 Mar 2023) · accessed Oct 2026
- Mondaq (Adeola Oyinlade & Co): Understanding personal income tax under the Nigeria Tax Act 2025 (5 Jan 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.