Yes. Under the Nigeria Tax Act 2025, VAT at 7.5% applies to services consumed in Nigeria, even when the supplier is abroad and the contract is signed outside the country. If a foreign vendor does not charge you Nigerian VAT, you may have to withhold it and remit it yourself by the 14th of the following month.
That is the question behind VAT on imported services in Nigeria, and it caught out the business in this case. The scenario below is a composite, anonymised and with illustrative figures. The legal points are real.
What happened to the firm?
An Abuja oil and gas services contractor paid three foreign vendors over twelve months: an engineering software licence, a technical consultancy in Dubai and an offshore inspection firm. The total was ₦400 million. None of the invoices carried Nigerian VAT, so the finance team booked the gross amount as an expense and moved on.
The assumption was simple and common. A foreign invoice, paid to a foreign account, sits outside Nigerian VAT. When a tax review compared the payment ledger with the VAT returns, the gap showed up. VAT of 7.5% on ₦400 million is ₦30 million, before interest and any penalty.
Why does Nigerian VAT apply to a foreign invoice?
The Act looks at where a service is consumed, not where the vendor sits or where the contract is signed. According to a Mondaq review of the VAT provisions, a non-resident supplier of taxable supplies to a Nigerian customer must register for VAT in Nigeria and show VAT on its invoices.
Many foreign vendors do not register. In that case the Nigerian customer withholds the VAT and remits it to the Nigeria Revenue Service. Section 155(2) also lets the Service direct a recipient to self-account where an invoice carried no VAT. Either way, the duty can land on you.
If the vendor is registered and charges VAT: you pay it with the invoice and claim it back as input VAT. If the vendor charges nothing: you calculate 7.5%, remit by the 14th of the following month and file it on your return by the 21st. Confirm the exact mechanism for each vendor against the Act, because the rules for appointed collectors and digital platforms differ.
How was it resolved?
1. Map every foreign payment. We listed each payee, the service bought and where it was used. Software and consultancy used in Nigeria were in scope. A purely foreign cost with no Nigerian use needed a separate look.
2. Compute VAT month by month. Each month had its own due date, so each month carried its own late-payment exposure.
3. Remit and file. The company paid the outstanding VAT and filed the corrected returns on Rev360. Our guide to filing VAT returns on Rev360 covers the steps.
4. Claim the input credit. The contractor makes taxable supplies, so VAT it remitted on these services qualified as input VAT under section 156(1), where the documents supported the claim. Most of the ₦30 million came back as a credit.
The permanent cost was smaller but real: interest on late remittance, any penalty, and several weeks of finance-team time. The same pattern appears with foreign shipping lines, where the issue is withholding tax rather than VAT. We covered that in a ₦680 million freight case.
What should you check in your own books?
Vendor list. Pull every payment to a non-resident vendor in the last 12 months. Software, cloud hosting, consultants, inspection and certification firms, and foreign agents are the usual suspects.
Invoice test. Does the invoice show Nigerian VAT? If not, flag it.
Accounts payable rule. Add a step so that no foreign invoice is paid until someone decides how VAT is handled.
What does this mean for your business?
Foreign payments are a blind spot in many finance departments because the invoice never touches a Nigerian VAT screen. Oil and gas, shipping and construction firms buy foreign services all year, so the exposure builds quietly. A twelve-month look-back costs a few days now. A review by the Service costs more, and the interest runs on every unpaid month.
Banks and NGOs with foreign-funded programmes face the same question on consultants and software. Check before the auditor or the Service does.
FAQ
Do I pay VAT on a software subscription from a foreign company?
Usually yes, if the service is consumed in Nigeria. Either the vendor charges 7.5% Nigerian VAT, or you withhold and remit it. Check whether the vendor is registered.
When is VAT on imported services due?
Withheld or self-accounted VAT is due by the 14th of the following month, and the return is due by the 21st. Missing the dates adds interest, so month-by-month tracking matters.
Can I claim the VAT back as input VAT?
Generally yes, if the service was used to make taxable supplies and you hold the right documents. VAT on inputs used for exempt supplies cannot be reclaimed.
Not sure whether your foreign vendor payments carry VAT exposure? Contact VOG Global in Area 10, Garki, Abuja, or visit vog.global, and we will review your payment ledger with you.