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The short answer
Generally no. Nigerian VAT is 7.5%, but the Nigeria Tax Act 2025 zero-rates exported services, so a Nigerian supplier selling services consumed by a Canadian firm outside Nigeria would usually charge VAT at 0%, and can still recover its input VAT. VAT does apply where the service is consumed in Nigeria, so check where the benefit of the work is used and ask your supplier how it treats the invoice.
The short version of Nigerian VAT
Nigeria's VAT rate is 7.5% (PwC Worldwide Tax Summaries, reviewed May 2026). Since 1 January 2026 VAT has been governed by the Nigeria Tax Act 2025 and administered by the Nigeria Revenue Service (NRS), which replaced FIRS. Small businesses are exempt from registering for and charging VAT: the Nigeria Tax Administration Act defines a small business for this purpose as one with turnover of ₦50 million or less and fixed assets under ₦250 million. A freelancer or small studio in Lagos below that line may not charge VAT on anything.
Exported services are zero-rated
The Nigeria Tax Act lists exported services, alongside exported goods (other than oil and gas) and exported incorporeal property, among zero-rated supplies (section 187, as summarised by Mondaq, May 2026). PwC's summary confirms that exported services are zero-rated and that input VAT on them is recoverable. Zero-rated is different from exempt: the supplier charges VAT at 0% but can still claim back VAT on its own costs, which is why a registered Nigerian supplier has every reason to treat a genuine export correctly.
What makes a service exported
Mondaq's summary notes that the article it reviewed does not define "exported service", and that services consumed in Nigeria are taxable whether rendered inside or outside Nigeria. Consumption is the deciding idea. A Lagos developer building software for your Toronto product, a QA team testing an app used by Canadian customers, or a designer producing your Canadian marketing are strong export cases. A Lagos agency running an event in Lagos for your Nigerian launch is not: the service is consumed in Nigeria.
| Scenario (illustrative) | Likely Nigerian VAT treatment | Why |
|---|---|---|
| Lagos developers build your Canadian SaaS product | Zero-rated (0%) | Benefit used by your business in Canada |
| Abuja bookkeeper keeps your Canadian company's books | Zero-rated (0%) | Service consumed by a Canadian business abroad |
| Lagos agency runs a launch event in Victoria Island for you | Standard rate (7.5%) | Consumed in Nigeria |
| Port Harcourt surveyor inspects a site you are buying in Nigeria | Standard rate, subject to any exemption | Relates to property in Nigeria |
| Small supplier under the small-business threshold | No VAT charged | Exempt from VAT registration and charging |
These are examples of how the rule is commonly read, not rulings. Mixed contracts, where part of the work benefits a Nigerian branch, need splitting.
What this means for your Canadian books
- If the invoice shows 7.5% VAT on a clearly exported service, ask the supplier why. It may be an error, an unregistered supplier adding VAT it will not remit, or a view that part of the service is consumed in Nigeria.
- If you pay Nigerian VAT, it is part of the cost of the service in your Canadian books. It is not Canadian GST/HST and cannot be claimed as an input tax credit in Canada.
- A proper invoice still matters. A VAT invoice under section 153 of the Act shows the supplier's tax ID, registration number, invoice number, date, your name, the gross amount, and the VAT charged and rate, even when that rate is 0%.
- Withholding tax is a separate issue. It applies to payments made by Nigerian payers, not to what you pay a Nigerian supplier from Canada.
Why suppliers sometimes add VAT anyway
Some Nigerian suppliers add 7.5% to every invoice because their accounting templates do it by default, or because they are unsure how the NRS will view a service with any Nigerian element. Others are larger firms moving onto the NRS e-invoicing platform, where the treatment of each line has to be set correctly. A polite question with the contract attached usually settles it. If the supplier still charges VAT, ask for a proper VAT invoice so the amount is at least documented.
The Canadian side
Buying a service from abroad can raise its own GST/HST questions in Canada, depending on whether you are registered and how you use the service. Registered businesses using the service fully in commercial activities are usually in a different position from exempt or unregistered buyers. That is a Canadian question for your accountant, and nothing a Nigerian supplier puts on its invoice changes it. For the registration threshold itself, see when a new Canadian business must register for GST/HST.
What to check first
- Is the supplier registered for VAT in Nigeria, or below the small-business threshold?
- Where is the service consumed: by your business in Canada, or in Nigeria?
- Does the invoice show the section 153 details and the VAT rate applied?
- Does the contract say prices are exclusive of any VAT, and who bears it if it applies?
- For anything unusual, has a Nigerian tax adviser confirmed the treatment?
This is information, not tax advice. The NRS is still issuing guidance under the 2025 Acts, so a supplier's adviser may take a cautious view on mixed or unusual services.
Where Pryme fits
Paying a Lagos supplier in naira from a Pryme Business Account keeps the payment in the currency of the invoice, and Swap shows the rate and the fee before you approve. For supplier payments in bulk, see bulk payouts and how a Canadian business pays a Nigerian supplier.
Questions people ask
Should my Nigerian contractor charge me VAT?
Usually not for services you use in Canada, because the Nigeria Tax Act 2025 zero-rates exported services. VAT at 7.5% applies where the service is consumed in Nigeria, and small suppliers under the threshold do not charge VAT at all.
What is the VAT rate in Nigeria in 2026?
The standard rate is 7.5% under the Nigeria Tax Act 2025, effective from 1 January 2026 (PwC, reviewed May 2026).
Can I claim Nigerian VAT back in Canada?
No. Nigerian VAT is not GST/HST and cannot be claimed as a Canadian input tax credit; if you pay it, it is part of the cost.
Who decides whether a service is exported?
The test turns on where the service is consumed. The Act's summary we reviewed does not define "exported service", so for mixed or unusual work ask a Nigerian tax adviser.
Sources
- PwC Worldwide Tax Summaries: Nigeria, corporate other taxes (reviewed 29 May 2026) · accessed Oct 2026
- Mondaq: Examination of the VAT provisions under the Nigeria Tax Act 2025 (28 May 2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · 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.