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, exported services are zero-rated for VAT, which means they are taxed at 0% rather than the standard 7.5%. You do not add VAT to a qualifying invoice for a foreign client, but you keep the sale in your VAT records and may be able to recover VAT you paid on inputs. Whether a service counts as exported depends on the Act's conditions, so confirm with a tax adviser.
The short version
If you run an agency, a software company, a consultancy or a creative studio in Nigeria and your clients are abroad, the Nigeria Tax Act 2025 is good news on VAT. Section 187 lists "exported services" among zero-rated supplies, together with exported goods (other than oil and gas) and exported incorporeal property such as some intellectual property rights.
Zero-rated means the supply is still taxable, but the rate is 0%. That is different from an exempt supply, and the difference matters for your costs.
Zero-rated vs exempt vs standard-rated
| Treatment | VAT you charge | Can you recover VAT on your inputs? | Example |
|---|---|---|---|
| Standard-rated | 7.5% | Yes, against your output VAT | Services to a client in Nigeria |
| Zero-rated | 0% | Yes, and you may claim a refund | Qualifying services to a client abroad |
| Exempt | None | Generally no | Items the Act lists as exempt |
Commentary on the Act notes that Nigerian businesses can reclaim input VAT where it exceeds output VAT, and that suppliers of zero-rated goods and services are entitled to a refund of VAT paid on inputs used to make those supplies. For an exporter of services, whose sales carry 0% VAT, that can mean the VAT paid on equipment, software and professional services becomes recoverable.
When is a service "exported"?
The Act sets out the conditions, and published summaries do not all agree on how they apply to every case. In general terms, think about these questions, and take advice before relying on zero-rating:
- Is the client a business or person outside Nigeria?
- Is the service used or enjoyed outside Nigeria, or does it benefit a Nigerian branch, subsidiary or person?
- Is the payment coming from abroad, in line with your contract?
- Is part of the work, such as an event or installation, physically delivered in Nigeria?
A service delivered to a foreign company but consumed by its Nigerian operations may be treated differently from one used entirely abroad. Mixed contracts may need to be split.
What to put on the invoice
- Show the VAT rate as 0% with a short description such as "zero-rated exported service".
- Keep the client's foreign address and registration details on the invoice.
- Keep the contract, proof of delivery and proof that payment came from abroad.
- Record the sale in your VAT return as a zero-rated supply, not leave it out.
For the rest of the invoice, see how to invoice a foreign client from Nigeria. If you also issue invoices to Nigerian clients, check how the e-invoicing rules apply to you in E-invoicing in Nigeria.
A worked example
Example only. A Lagos software studio bills ₦60,000,000 equivalent in a quarter: ₦45,000,000 to clients abroad for apps used in their home markets, and ₦15,000,000 to Nigerian clients. It paid ₦2,250,000 of VAT on laptops, software licences and office costs in the same quarter.
- Output VAT on Nigerian sales: 7.5% of ₦15,000,000 = ₦1,125,000.
- Output VAT on export sales: 0% of ₦45,000,000 = ₦0.
- Input VAT paid: ₦2,250,000.
- Input VAT exceeds output VAT by ₦1,125,000, which the studio may be able to reclaim, subject to the rules on which inputs qualify and the refund process.
If those export sales had been treated as exempt rather than zero-rated, much of that input VAT would have become a cost. That is why getting the treatment right matters for margins.
Records to keep
- Signed contracts showing the client's location and where the service is used.
- Invoices with the 0% line and description.
- Bank records showing payment received from abroad, by currency.
- Purchase invoices showing the VAT you paid on inputs.
PwC's tax summary notes that input VAT is claimable within five years after the end of the period, and that where inputs support both taxable and non-taxable supplies, only the taxable share can be deducted. If you sell some exempt items as well as services, keep your costs split so the claim can be supported.
Small businesses
Not every business has to charge VAT. Published summaries say small businesses are excluded from the duty to collect VAT on invoices, although the threshold and conditions are set in the law and guidance from the Nigeria Revenue Service rather than in these summaries. If your turnover is close to the line, ask an adviser whether you should register anyway: a small exporter of services that is not registered may not be able to reclaim input VAT, which could make registration worthwhile.
For withholding tax on invoices from Nigerian clients, a separate topic, see withholding tax on invoices.
Where Pryme fits
Clear records make zero-rating easier to support. With a Pryme Business Account, payments from foreign clients arrive in USD, GBP or EUR to local account details and stay in that currency, so your statement shows clearly that the money came from abroad. Through Pryme's partnership with VerifyDoc.ai you can generate a verifiable statement that an adviser or tax officer can check is genuine and unaltered. The Finance agent can prepare a quarterly summary of foreign and local sales for your adviser.
Questions people ask
Do I add VAT to an invoice for a client in the UK or US?
If your service qualifies as an exported service under the Nigeria Tax Act 2025, it is zero-rated, so you show VAT at 0%. Confirm the conditions with a tax adviser.
What is the difference between zero-rated and VAT exempt in Nigeria?
Both mean no VAT is charged on the sale, but zero-rated suppliers can generally recover VAT on their inputs, while exempt suppliers generally cannot.
What is the VAT rate in Nigeria?
Commentary on the Nigeria Tax Act 2025 gives the standard rate as 7.5%.
Can I get a VAT refund as a service exporter?
Suppliers of zero-rated supplies are entitled to a refund of VAT paid on inputs used for those supplies, subject to the refund process.
Sources
- Examination of the VAT provisions under the Nigeria Tax Act, 2025 (Mondaq) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, other taxes (VAT) · 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.