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, a small business (turnover of ₦100 million or less and fixed assets not above ₦250 million, excluding professional service providers) is exempt from registering for, charging and remitting VAT. If you are in that group and have not opted in, do not put a VAT line on your invoice. Show the price as the full amount due and add a short note stating that no VAT is charged and why.
A common mistake among small Nigerian businesses is adding 7.5% VAT to an invoice "because the client asked for it" or because a template included the line. If you are not required to charge VAT, collecting it creates a problem: you have taken money described as tax that you are not set up to remit. The opposite mistake also happens: a business customer deducts VAT from your invoice as though you had charged it, leaving you short.
Who does not charge VAT under the 2025 Act
The Nigeria Tax Act 2025 took effect on 1 January 2026. According to Forvis Mazars (16 March 2026), the VAT rate remains 7.5%, and a small business is exempt from VAT registration, charging VAT, filing returns and remitting VAT if it meets both of these tests:
- Annual turnover of ₦100 million or less.
- Total fixed assets not exceeding ₦250 million.
Two qualifications matter. First, professional service providers are excluded from the small business definition, so a small firm of consultants, lawyers or accountants cannot assume the exemption applies; check how the NRS treats your work. Second, the exemption can be given up: Forvis Mazars notes that a small business may opt out by written notice, and some do so because larger customers prefer suppliers who charge VAT. Once turnover passes the threshold, VAT compliance becomes mandatory. Our planned guide on the VAT registration threshold covers the timing.
What to write on the invoice
The invoice should show everything a normal invoice shows (see our invoice checklist), but with the tax area handled clearly:
- No VAT line, and no "VAT 0%" line that a customer might read as zero-rating.
- A single total headed "Total due" rather than "Total (VAT inclusive)".
- A short statement near the total, for example: "No VAT has been charged. [Business name] is not registered for VAT as a small business under the Nigeria Tax Act 2025."
- Your TIN, if you have one. Customers deducting withholding tax will need it, and a TIN can affect whether WHT is deducted at all.
- Payment terms and account details as usual.
Keep the wording factual. Do not write that the goods or services are "VAT exempt" unless that is true of the supply itself; the point is that you, the supplier, are not charging VAT.
Stopping customers from deducting VAT
Business customers sometimes run every supplier invoice through the same process: split out VAT, then deduct withholding tax. If your invoice has no VAT, there is nothing to split, but a busy accounts officer may still treat 7.5% of your total as VAT. The note on the invoice is the first defence. The second is to confirm in writing, when you are set up as a vendor, that you do not charge VAT.
There is a related point the customer's accountant may raise. Forvis Mazars reports that under the new law larger companies must self-charge VAT on supplies they receive from exempt small businesses. That is the buyer's own obligation, accounted for in its own returns. It does not entitle the buyer to reduce what it pays you.
Withholding tax is a separate matter
Not charging VAT does not stop a customer deducting WHT, which is an advance payment of your income tax, not a sales tax. The Withholding Tax Regulations 2024, effective 1 January 2025 according to SCP Law (October 2024), set rates such as 2% for supply of goods and 5% for consultancy and professional fees, per the Mondaq summary of July 2024. The same summary notes that small companies with turnover below ₦25 million need not deduct WHT where the supplier has a TIN and the transaction is ₦2 million or less in the month. If WHT is deducted, ask for the receipt; see when a customer pays less than the invoice.
Worked example
Example only. A small printing business, not VAT registered and within the small business definition, supplies 500 brochures to a company for ₦250,000.
| Line | Correct invoice | Wrong invoice |
|---|---|---|
| Brochures, 500 | ₦250,000 | ₦250,000 |
| VAT | No line; note explains | ₦18,750 (7.5%) |
| Total due | ₦250,000 | ₦268,750 |
| If customer deducts 2% WHT on goods | Pays ₦245,000, issues WHT receipt for ₦5,000 | Confusion over what was VAT and what was price |
Check the sums: 7.5% of ₦250,000 is ₦18,750, and 2% of ₦250,000 is ₦5,000. On the correct invoice, ₦245,000 received plus a ₦5,000 WHT credit settles the ₦250,000 in full.
If you charged VAT by mistake
- Stop adding VAT to new invoices immediately.
- Issue a credit note cancelling the VAT element on the affected invoice, and a corrected invoice.
- Refund or credit the VAT amount to the customer if they paid it.
- Ask a chartered accountant whether anything collected must be accounted for to the NRS before refunding.
Where Pryme fits
A Pryme Business Account supports invoicing alongside a business multicurrency account. Its Finance agent prepares work for a person to approve above a set ceiling, but the decision on whether you charge VAT rests with you and your accountant.
Questions people ask
Should I add VAT to my invoice if I am not registered?
No. Under the Nigeria Tax Act 2025, a small business within the ₦100 million turnover and ₦250 million fixed assets limits is exempt from charging VAT, unless it opts in. Professional service providers are excluded from that definition.
What do I write on an invoice if I don't charge VAT?
Leave out the VAT line, show a single total due, and add a short note such as "No VAT has been charged; the business is not registered for VAT as a small business under the Nigeria Tax Act 2025."
Can a customer deduct VAT from my invoice if I didn't charge it?
There is no VAT on the invoice to deduct. A larger customer may have to self-charge VAT in its own records, but that does not reduce what it owes you. Withholding tax is separate and may still be deducted.
What is the VAT threshold for small businesses in 2026?
Forvis Mazars (March 2026) reports that the small business exemption under the Nigeria Tax Act 2025 uses ₦100 million turnover and ₦250 million fixed assets. Confirm your position with the NRS.
Sources
- Forvis Mazars: VAT and Nigeria's 2025 tax reforms, key changes for businesses (16 Mar 2026) · accessed Oct 2026
- Mondaq (Udo Udoma & Belo-Osagie): An overview of the Nigerian Withholding Tax Regulations of 2024 (11 Jul 2024) · accessed Oct 2026
- SCP Law: What SMEs should know about the 2024 withholding tax regulations (31 Oct 2024) · 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.