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The short answer
No. Under the Nigeria Tax Act 2025, in force from 1 January 2026, land and buildings, including an interest in them, are exempt from VAT, and the NRS clarification reported in February 2026 confirms this covers commercial as well as residential rent. Services billed around a tenancy, such as agency, valuation or legal fees, can still attract VAT at 7.5%.
Shop owners, office tenants and landlords ask this every rent season, and the answer changed with the tax reform that took effect on 1 January 2026. Under the Nigeria Tax Act 2025, rent on a shop, office or warehouse is not subject to VAT. What still attracts VAT are the services wrapped around a tenancy, and that is where most invoicing mistakes now happen.
What the law says
Section 186 of the Nigeria Tax Act 2025 (NTA) lists goods and services that are exempt from VAT. Item 12 on that list reads "Land or building, including interest in land or building", according to a May 2026 review of the VAT provisions published on Mondaq. A lease or tenancy is an interest in a building, so the rent paid for it sits inside the exemption.
The Nigeria Revenue Service (NRS), the body that replaced FIRS, addressed confusion about housing and VAT in February 2026. ThisDay's report of that clarification lists "rent (both residential and commercial)" among the items on which VAT has been removed, and quotes Taiwo Oyedele saying that "land, buildings and rent are now fully exempted from VAT". A February 2026 Mondaq guide by Charis Legal says the same in plain terms: interest in land or buildings, "which includes rent for shops, offices, or flats", is exempt.
What still attracts VAT around a tenancy
The exemption covers the interest in the property. It does not turn every payment connected with a property into an exempt payment. The same Mondaq review notes that services connected with immovable property remain taxable, naming the services of agents, experts, engineers, architects and valuers. In practice, check each line on a property bill separately:
| Charge | VAT position under NTA 2025 | Note |
|---|---|---|
| Rent for a shop, office or warehouse | Exempt (land or building) | No VAT line on the rent invoice |
| Agency or letting fee | Taxable service | Charged by the agent if the agent is not an exempt small business |
| Valuation, survey, architect's fees | Taxable service | Listed as services connected with immovable property |
| Legal fees for drafting the lease | Taxable service | Charged by the law firm; professional firms cannot use the small-business exemption |
| Facility management, cleaning, security billed as a service | Usually a taxable service | Treatment depends on how the charge is structured; get it confirmed |
Service charges are the grey area. If the landlord bills one figure for occupying the space, it looks like rent. If a facility manager invoices for cleaning, security and generator maintenance as distinct services, those look like services. The Act as reported does not single out service charges, so take advice where the amounts are material.
How landlords and tenants should invoice
For the landlord
- Issue the rent invoice or demand note with no VAT line. Do not add 7.5% to rent because older templates did.
- Show any separately billed services on separate lines, with VAT only where the supplier of that service is required to charge it.
- Keep the tenancy agreement, invoices and receipts. The Nigeria Tax Administration Act 2025 (NTAA) s.31 requires books and records to be kept for at least six years after the year of assessment, including by exempt persons.
- Note that rental supplies are treated as happening in stages, when each payment falls due or is received, whichever comes first, according to the Mondaq review. That matters for the taxable lines on the same bill.
For a company tenant
VAT may be gone, but withholding tax has not. Under the Deduction of Tax at Source (Withholding) Regulations 2024, as summarised by PwC Nigeria, rent attracts withholding tax at 10%. A company tenant deducts it from the rent, remits it to the tax authority and gives the landlord a receipt the landlord uses as a tax credit. See WHT rates on rent, contracts and professional fees for the full table, and withholding tax on invoices for collecting the receipts.
Worked example: a Lagos shop let to a company
Example only. A landlord lets a shop to a limited company at ₦3,000,000 a year. The agent who found the tenant charges a 10% fee and is not a small business, so charges VAT.
| Item | Amount |
|---|---|
| Annual rent | ₦3,000,000 |
| VAT on rent | ₦0 (exempt) |
| Withholding tax deducted by the company tenant at 10% | ₦300,000 |
| Cash the landlord receives | ₦2,700,000 |
| Agency fee (10% of rent, example) | ₦300,000 |
| VAT on agency fee at 7.5% | ₦22,500 |
| Total paid to the agent | ₦322,500 |
The landlord ends up with ₦2,700,000 in cash plus a withholding tax receipt for ₦300,000. The ₦22,500 VAT belongs to the agent's invoice, not the rent.
What to check first
- Read the invoice: is VAT being added to rent itself? Under NTA 2025 it should not be.
- Separate rent from services on the bill, and ask the supplier of each service whether it is charging VAT and why.
- If you are a company tenant, deduct withholding tax on rent and send the landlord the receipt.
- If you signed a lease before 2026 that says rent is "exclusive of VAT", ask your lawyer how that clause works now that rent is exempt.
- Keep everything for six years.
Where Pryme fits
Landlords who collect from several tenants can give each one its own account number through virtual accounts, so each payment is easy to match. Send the rent demand through invoicing. If a tenant disputes a payment, a verifiable statement from receipts and statements, built with VerifyDoc.ai, lets anyone check it has not been altered.
Questions people ask
Do I pay VAT on shop rent in Nigeria in 2026?
No. Under the Nigeria Tax Act 2025, land and buildings, including an interest in them, are VAT-exempt, and the NRS clarification reported in February 2026 lists commercial rent as exempt. Services billed alongside rent can still carry VAT.
Is VAT charged on office service charge?
The Act as reported does not single out service charges. If the charge is for distinct services such as cleaning or security, it may be a taxable service. Ask the landlord how it is structured and take advice if the sum is large.
Should my landlord's invoice show 7.5% VAT?
Not on the rent itself. VAT may appear on separate lines for services such as agency or facility management fees, if that supplier must charge VAT.
Do companies still deduct withholding tax on rent?
Yes. The 2024 Withholding Regulations, as summarised by PwC, set WHT on rent at 10%. The tenant deducts it and gives the landlord a receipt to use as a tax credit.
Sources
- Examination of the VAT provisions under the Nigeria Tax Act 2025 (Mondaq, 28 May 2026) · accessed Oct 2026
- Nigeria Tax Act 2025: Setting the Record Straight on Housing, VAT and the '25% Tax' Claim (ThisDay, 16 Feb 2026) · accessed Oct 2026
- Common tax myths in 2026 (Mondaq, Charis Legal, 24 Feb 2026) · accessed Oct 2026
- Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 (PwC Nigeria, Jul 2024) · 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.