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
If a US company buys services from a Nigerian supplier for use outside Nigeria, the supply is an exported service and zero-rated, so no Nigerian VAT should be added. If the services are consumed in Nigeria, for example by your Nigerian subsidiary, 7.5% VAT applies, and a VAT-registered Nigerian buyer self-accounts for VAT on services from abroad.
The principle: VAT follows consumption
Nigerian VAT is charged on a consumption basis: what matters is where the service is used, not where the supplier sits (WTS Blackwoodstone via Mondaq, 11 Mar 2026). The standard rate stays at 7.5% under the Nigeria Tax Act 2025 (Forvis Mazars, 16 Mar 2026). For a US company, that gives two different situations that are often confused.
| Who buys | From whom | Where it is used | VAT position |
|---|---|---|---|
| US company | Nigerian supplier | Outside Nigeria | Exported service, zero-rated |
| US company | Nigerian supplier | In Nigeria (e.g. an event in Lagos) | 7.5% likely charged by the supplier |
| Nigerian subsidiary | US parent or US vendor | In Nigeria | Imported service; the VAT-registered Nigerian buyer self-accounts |
| Nigerian subsidiary | Nigerian supplier | In Nigeria | Ordinary domestic VAT at 7.5% |
Buying from Nigeria for use in the US
PwC's Nigeria summary (reviewed 29 May 2026) states that exported services are zero-rated, and that input VAT on exported services is recoverable by the supplier. Zero rating is still a VAT supply: the supplier records it at 0% rather than leaving it off its return. So the correct invoice from a Lagos design agency to your Delaware company shows VAT at 0%, not "VAT not applicable". If your supplier adds 7.5% on work used entirely in the US, query it with reference to zero rating; you have no way to recover Nigerian VAT from the US, so it is a real cost.
Some suppliers will not mention VAT because they are exempt small businesses: Forvis Mazars reports the threshold under the 2025 Act as turnover up to ₦100 million and fixed assets up to ₦250 million, with professional service providers excluded. Our Nigeria library explains VAT on exported services from the supplier's side.
Buying from the US for use in Nigeria: the reverse charge
The reverse direction matters once you have a Nigerian subsidiary. When the subsidiary pays the US parent a management fee, or pays a US software vendor, the service is consumed in Nigeria. WTS Blackwoodstone notes that VAT-registered Nigerian business customers self-account for VAT on services from foreign providers, and PwC describes a reverse-charge mechanism for services where no tax invoice was received. In practice, the subsidiary calculates 7.5% on the fee, pays it to NRS and, where the service is used for taxable supplies, claims it back as input VAT.
Under the 2025 Act, input VAT on services and fixed assets used for taxable supplies is claimable from 1 January 2026, with claims made within five years, according to Forvis Mazars. That is a change from the old regime, which was narrower, and it makes the reverse charge cash-neutral for many fully taxable businesses.
Worked example
Example only, using an assumed rate of ₦1,500 to $1; use the actual rate on the day. The Lagos subsidiary pays its US parent a $40,000 management fee.
- Naira value: $40,000 x ₦1,500 = ₦60,000,000
- Self-accounted VAT at 7.5%: ₦4,500,000, paid to NRS
- If the subsidiary's supplies are fully taxable, it claims ₦4,500,000 as input VAT: net cost nil
- If it makes exempt supplies, part or all of the ₦4,500,000 is a real cost
The same fee also attracts withholding tax; see WHT on payments to a US parent.
Paperwork for the reverse charge
Keep the foreign supplier's invoice, the payment record, the exchange rate used to convert it to naira and the VAT return on which the self-accounted VAT was declared. If you claim the same amount back as input VAT, the claim and the payment should appear on the same return or be traceable between returns. An auditor or NRS officer will want to see both sides.
Digital services sold into Nigeria
A separate rule applies if your US company sells digital services to Nigerian customers. PwC notes that non-resident digital companies appointed by the tax authorities must charge, collect and remit VAT to NRS. That is a selling question rather than a buying one; it is covered in VAT for a US business selling digital services.
Common mistakes
- Paying Nigerian VAT on work used entirely in the US because the invoice included it. Query it first.
- Assuming the reverse charge does not apply because the US parent is "the same company". The subsidiary is a separate Nigerian taxable person.
- Forgetting to self-account on software subscriptions billed to the Nigerian entity by US vendors.
- Treating an exempt small supplier's invoice as defective because it shows no VAT.
- Leaving VAT out of the intercompany agreement, so nobody knows whether the fee includes it.
What to check first
- Where is the service used? That decides most of the answer.
- Is your Nigerian entity VAT-registered, and does it make taxable supplies?
- Does the supplier invoice show 0% for exported services?
- Is the intercompany agreement clear on whether fees are VAT-exclusive?
Where Pryme fits
The Finance agent can prepare the monthly VAT working, including self-accounted VAT on intercompany fees, for a person to review. A Pryme Business Account holds the naira to pay NRS and the dollars to pay the parent.
Questions people ask
Does a Nigerian company charge VAT to a US client?
Not for services exported and used outside Nigeria; these are zero-rated. VAT at 7.5% applies where the service is consumed in Nigeria.
What is the reverse charge in Nigeria?
A VAT-registered Nigerian business that buys services from abroad accounts for 7.5% VAT itself, pays it to NRS and may claim it back as input VAT if used for taxable supplies.
Can a US company reclaim Nigerian VAT?
Generally not without a Nigerian VAT registration. That is why it matters that Nigerian suppliers apply zero rating to exported services.
Is Nigerian VAT still 7.5% in 2026?
Yes. The rate stays at 7.5% under the Nigeria Tax Act 2025, effective 1 January 2026.
Sources
- Mondaq (WTS Blackwoodstone): Taxation of digital activities and cross-border transactions under the 2025 tax reform Acts (11 Mar 2026) · accessed Oct 2026
- Forvis Mazars: 2025 NTA, VAT key business changes (16 Mar 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, other taxes (last 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.