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.
Part of the guideDoing business with Africa: paying and getting paid in Nigeria
The short answer
Nigerian VAT of 7.5% applies to digital services consumed in Nigeria, wherever the supplier is based. Under the tax laws in force from 1 January 2026, a non-resident supplier selling to Nigerian consumers is expected to register with the Nigeria Revenue Service, charge VAT and remit it, with a simplified regime for foreign suppliers above about $25,000 a year of Nigerian sales. Where the customer is a VAT-registered Nigerian business, it generally self-accounts for the VAT instead.
If you sell software subscriptions, streaming, online advertising, cloud services or digital content to people in Nigeria, Nigerian VAT is now your problem, not just your customer's. Nigeria rewrote its tax laws in 2025, and VAT on imported digital services is one of the areas it tightened. This article is general information, not tax advice. For the wider rules on getting paid by Nigerian clients, see the parent guide on paying and getting paid in Nigeria.
The rule: VAT follows consumption
The Nigeria Tax Act 2025, in force from 1 January 2026, anchors VAT on the place of consumption. If a service is used in Nigeria, Nigerian VAT applies, whatever the supplier's location. The rate remains 7.5%.
Services in scope include streaming, cloud computing, online advertising, software subscriptions and crypto exchanges serving Nigerian users, as well as the exploitation in Nigeria of intellectual property and other intangible rights. To decide whether a customer is in Nigeria, a supplier can rely on evidence such as the billing address, the customer's incorporation in Nigeria or a Nigerian IP address.
The tax is being collected. National Bureau of Statistics data show foreign VAT collections of ₦830.47 billion in the first quarter of 2026, up about 83% on the same quarter of 2025.
Who accounts for the VAT
| Customer | Who accounts for VAT | What the foreign supplier does |
|---|---|---|
| Nigerian consumer (B2C) | The foreign supplier | Register, charge 7.5% on the price, file and remit to the Nigeria Revenue Service (NRS) |
| VAT-registered Nigerian business (B2B) | Usually the customer, by self-accounting (reverse charge) | Invoice without Nigerian VAT where the reverse charge applies; keep evidence the customer is a registered business |
| Customers reached through a marketplace or app store | Possibly the platform, if the NRS appoints it as a collection agent | Check the platform's terms; it may collect VAT for you |
| Nigerian business that is not VAT-registered | Rules may require the customer to withhold VAT on payment | Agree in the contract how VAT is handled |
The NRS can appoint non-resident suppliers or digital platforms as collection agents, which shifts the collection duty away from Nigerian customers. Marketplaces and similar intermediaries may be held liable for VAT on sales they facilitate.
Registration and filing
Nigeria first set up a simplified VAT regime for non-resident suppliers in 2021, with a registration threshold of $25,000 of supplies to Nigeria in any 12 consecutive months. A Simplified Compliance Regime portal is being rolled out for registration and reporting under the 2025 Acts, and current guidance keeps the $25,000 annual threshold.
- Get a Nigerian tax ID. Registration through the simplified route gives you a tax identification number. Under the 2021 regime, VAT registration alone did not create a taxable presence for income tax.
- File monthly. The 2021 regime required monthly returns, including nil returns for months with no Nigerian sales.
- Remit in the currency of the transaction. VAT collected on foreign currency sales has been remitted to designated accounts in that currency.
- Issue electronic invoices. VAT-registered businesses must issue e-invoices showing the supplier's name and tax ID, a description, the date, the value and the VAT. The 2025 Acts also require non-resident suppliers to adopt the NRS's e-invoicing system.
- Keep records of each supply's type, date and VAT, and the evidence you used to place the customer in Nigeria.
Check the NRS's current guidance before registering, as the portal and procedures under the new Acts are still being finalised.
A worked example: a UK SaaS company
A UK software company sells a project management tool. In 2026 it expects $40,000 from Nigerian consumers and freelancers paying by card, and $60,000 from VAT-registered Nigerian companies on annual contracts.
- Threshold. Total Nigerian sales of $100,000 are well above $25,000, so it registers under the simplified regime.
- Consumer sales. If it adds VAT to its $40,000 of list prices, it collects $3,000 (7.5%) and remits it. If its prices already include VAT, the VAT inside $40,000 is $2,790.70, and its net revenue falls to $37,209.30.
- Business sales. On the $60,000, the Nigerian companies self-account for VAT under the reverse charge. The supplier records each customer's VAT registration as evidence.
- Withholding tax. Some business customers may also deduct withholding tax on the licence fees. That is income tax, not VAT; see Nigerian withholding tax for non-resident companies.
- Income tax presence. The company should check whether its Nigerian revenue creates a significant economic presence under the 2025 Act. The Act leaves the threshold to a regulation from the Minister of Finance; the previous order used ₦25 million a year.
Pricing decisions
The example shows the choice every consumer-facing seller faces: add 7.5% on top and keep your margin, or absorb it and keep the price your customers know. Either is lawful if the VAT is accounted for. What matters is to decide before you register, to show the VAT clearly on consumer receipts, and to price in naira or dollars consistently so that the VAT you remit matches what your records say you collected. If you price in naira, record the exchange rate you used for each month's return.
Common mistakes
- Treating every Nigerian customer as a business and charging no VAT. Consumer sales need VAT.
- Ignoring Nigeria because sales arrive through card payments or app stores. Check whether the platform is collecting on your behalf.
- Forgetting nil returns in quiet months.
- Confusing VAT with withholding tax. They are separate taxes with separate paperwork.
If you are UK-based, your Nigerian income may also be shaped by the UK–Nigeria double tax treaty, which deals with income tax but not VAT. The Nigeria business guide summarises how VAT, withholding tax and treaties fit together.
Where Pryme fits
VAT registration, returns and tax representation sit with a Nigerian tax adviser; the sections above explain what to ask. For the money side, a business multicurrency account holds NGN, USD, GBP and EUR in separate balances. Pryme Financial Ltd is a technology company, not a bank. In Nigeria, naira deposits are held by Solid Allianze Microfinance Bank Ltd, licensed by the CBN and insured by the NDIC up to the applicable limit; outside Nigeria, activities are carried out through regulated partners. Checkout is a free, Nigeria-only bank-transfer checkout; check whether your business is eligible to use it. Whatever you use to collect, keep a record of each sale for VAT.
Questions people ask
Do foreign companies have to charge Nigerian VAT?
Yes, if they supply digital or other services consumed in Nigeria to Nigerian consumers and their Nigerian sales exceed the threshold, currently about $25,000 a year under the simplified regime. Sales to VAT-registered Nigerian businesses are usually handled by the customer under a reverse charge.
What is the VAT rate in Nigeria for digital services?
7.5%, the standard Nigerian VAT rate. It applies to services consumed in Nigeria from 1 January 2026 under the place-of-consumption rule.
How does a non-resident register for VAT in Nigeria?
Through the Nigeria Revenue Service's simplified registration route for non-resident suppliers, which issues a tax identification number. Check the NRS's current portal and guidance, as procedures under the 2025 Acts are being finalised.
Does registering for Nigerian VAT make my company taxable in Nigeria?
Under the 2021 simplified regime, VAT registration alone did not create a taxable presence for income tax. Income tax depends separately on permanent establishment and significant economic presence rules.
Do app stores collect Nigerian VAT for developers?
They may. The NRS can appoint platforms as collection agents, and marketplaces may be liable for VAT on sales they facilitate. Check your platform's tax terms for Nigeria.
Sources
- VATCalc: Nigeria VAT obligations for non-resident digital service providers (Jan 2026) · accessed Oct 2026
- Mondaq: Taxation of digital activities and cross-border transactions under the Tax Reform Acts 2025 · accessed Oct 2026
- KPMG: FIRS guidelines on the simplified VAT compliance regime for non-resident suppliers · accessed Oct 2026
- KPMG: Nigeria Tax Act 2025 reforms (June 2026) · accessed Oct 2026
- Nairametrics: Foreign VAT collections rise 83% to ₦830.47 billion in Q1 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.