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, services consumed in Nigeria are taxable for VAT whether they are rendered inside or outside Nigeria, and the rate remains 7.5%, according to legal and accounting summaries published in 2026. A non-resident supplier is expected to register and include VAT on its invoice, though the Nigerian customer may account for it instead. Do not add VAT to an invoice until you know which of those applies to you.
A finance officer in Abuja asks you to "reissue the invoice with VAT". You have never charged VAT in your life: in the US, consumption taxes are state sales taxes, not a national VAT. The request is not random. Nigeria's 2025 tax laws put more weight on foreign suppliers, and finance teams want invoices that match. This guide explains what the law is reported to say, what your options are, and how to answer. It is information, not tax advice; a Nigerian tax adviser should confirm your position.
What the Nigerian rules say
Mondaq's 28 May 2026 examination of the VAT provisions in the Nigeria Tax Act 2025 summarises the points that matter for a US freelancer:
- Services consumed in Nigeria are taxable whether they are rendered inside or outside Nigeria.
- A non-resident supplier is expected to register and include VAT on its invoice.
- The Nigerian customer may withhold and remit the VAT instead.
- Exported services are zero-rated, which is the other side of the same idea: the tax follows where the service is consumed.
Forvis Mazars' March 2026 summary confirms the Act keeps VAT at 7.5%. The Nigeria Tax Administration Act 2025, section 6, requires a non-resident person supplying taxable goods or services to Nigeria to register for a Tax ID, with an exception suggested for those earning only passive income.
Your three possible responses
1. The client accounts for the VAT
If the client self-accounts, your invoice shows your fee with no VAT line, and the client handles VAT with the Nigeria Revenue Service (NRS). Ask the client to confirm this in writing. Many finance teams prefer it because it keeps a foreign supplier off the Nigerian VAT register.
2. You register and charge VAT
If you register with the NRS and get a Tax ID, you add 7.5% VAT, show your Tax ID, and remit it under the Nigerian rules. That brings filing duties in Nigeria. For a freelancer with one or two Nigerian clients, it is a lot of administration, so take Nigerian advice first. Getting a Nigerian Tax ID while living in the US explains the registration step.
3. You price VAT-inclusive
Some freelancers agree a total price and let the client deal with the split. That only works if someone is in fact accounting for the VAT. Writing "VAT inclusive" on an invoice without a registration behind it creates confusion, not compliance.
What the invoice should show either way
- Your legal or business name, US address and contact email.
- The client's registered company name and address in Nigeria, and their Tax ID if they give it.
- Invoice number, date, and a description of the service and the period it covers.
- The fee in the agreed currency, usually USD.
- Either a VAT line at 7.5% with your Tax ID, or a note that VAT is to be accounted for by the customer, as agreed.
- Payment details and due date.
A worked example, labelled as such. Your fee is $4,000. If you are registered and charge VAT, the invoice shows $4,000 + $300 VAT = $4,300. If the client self-accounts, the invoice shows $4,000 and a note; the client calculates and remits the VAT itself. In both cases your US income is $4,000, because VAT you collect belongs to the Nigerian tax authority.
Withholding tax is a separate deduction
VAT is added to the price. Withholding tax is taken out of it. PwC's Nigeria summary (reviewed 29 May 2026) lists 10% withholding for non-residents on professional and consultancy fees. A client may do both, so agree in the contract whether your fee is gross or net of Nigerian deductions. For more, see whether Nigerian VAT applies to a US freelancer, and the Nigeria-side guide on VAT on digital services sold into Nigeria.
A reply you can adapt
A short, neutral reply often works: thank the client, say you are a US-based supplier without a Nigerian VAT registration, and ask whether their finance team will account for VAT on the service under the Nigeria Tax Act 2025. Offer to add a note on the invoice reflecting whatever they confirm. If they insist you must register, ask them to put it in writing with the reason, then take Nigerian advice before you change anything. Keep the thread with the invoice, because it shows how VAT was handled if their auditors later ask.
Whatever you agree, make the contract match it, so the next invoice does not reopen the question.
Remember too that state sales tax rules in the US are separate again: whether your service is taxable in your own state has nothing to do with Nigerian VAT, so do not let one question settle the other.
Where Pryme fits
Pryme invoicing lets you add or leave out a tax line per client and keep the client's Tax ID on file, and verifiable invoices through VerifyDoc.ai on receipts can be checked by the client's auditors. Pryme does not register you for Nigerian VAT; that remains your decision with an adviser.
Questions people ask
Do US freelancers have to charge Nigerian VAT?
Under the Nigeria Tax Act 2025, services consumed in Nigeria are taxable even if rendered abroad, and a non-resident supplier is expected to register, though the customer may account for it. Confirm your position with a Nigerian adviser.
What is the VAT rate in Nigeria in 2026?
7.5%. Summaries of the Nigeria Tax Act 2025, effective 1 January 2026, say the rate was retained.
Can my Nigerian client pay the VAT instead of me?
Commentary on the Act says the Nigerian customer may withhold and remit the VAT. Get the client's confirmation in writing and note it on the invoice.
Is VAT I collect part of my US income?
Not if you are collecting it for the Nigerian tax authority and remitting it. Your income is the fee before VAT.
Sources
- Mondaq: Examination of the VAT provisions under the Nigeria Tax Act 2025 (28 May 2026) · accessed Oct 2026
- Forvis Mazars: Nigeria's tax reform in focus, NTA 2025 VAT key business changes (16 Mar 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette text) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate withholding taxes (reviewed 29 May 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.