Nigeria's VAT rate in 2026 is 7.5%, the same rate that has applied since February 2020. The Nigeria Tax Act 2025, in force from 1 January 2026, kept it there after the National Assembly rejected a proposed increase. On 27 October 2026 the Nigeria Revenue Service (NRS) said so again at a stakeholder forum in Kano.
So why do so many business owners believe VAT has gone up? Partly old headlines, and partly real changes to what VAT applies to. The rate stayed still. The base moved.
The myth: "VAT went up under the new tax law"
The myth has a real origin. The original tax reform bills proposed a phased increase in the VAT rate, starting at 10% and rising to 15% by 2030, according to a March 2026 review by Forvis Mazars. That proposal was debated loudly through late 2024 and early 2025.
It did not survive. When the Senate passed the reform bills in May 2025, it rejected the move from 7.5% to 10% (Nairametrics, 7 May 2025). The House of Representatives had already kept the rate at 7.5%. Many of the earlier headlines are still shared on WhatsApp as if they were current.
What is the VAT rate in Nigeria in 2026?
The fact: the standard rate is 7.5%. At the NRS forum in Kano, Samaila Abdullahi, the NRS Tax Administrator for Kano, Jigawa and Katsina States, confirmed the rate and urged taxpayers to rely on "the actual provisions of the law rather than relying on assumptions, rumours or misleading information" (Voice of Nigeria, 27 October 2026).
Nigeria's rate is also low by regional standards. Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, made this comparison in December 2025 (BusinessDay):
- Nigeria: 7.5%
- Ghana: 15%
- South Africa: 15%
- Kenya: 16%
If the rate did not change, why is my VAT bill higher?
Because the Nigeria Tax Act changed which supplies carry VAT and how strictly it is collected. Several changes push costs up for some businesses:
- Air travel: Nigerian-registered airlines must now charge VAT on ticket sales. A company with heavy domestic travel will see it on every booking.
- Diplomatic purchases: supplies to diplomatic missions moved from zero-rated to exempt, which changes the input VAT position for suppliers to embassies.
- E-invoicing: transactions now run through the NRS electronic fiscalisation system. Failing to process a taxable supply through it attracts a ₦200,000 penalty plus 100% of the tax due. Sales that once slipped past the VAT return are now visible.
- Deductibility: under section 21(p) of the Act, an expense is not deductible for income tax if the VAT on it was not paid. We worked through a live example in our ₦72 million case in point.
Other changes push the other way. Basic food items, medical supplies and educational materials are now zero-rated. Input VAT on services and fixed assets can now be recovered where they are used for taxable supplies, which we covered in our post on input VAT on services. If your net VAT cost went up this year, the cause is almost certainly one of these base changes, not the rate.
Who does not have to charge VAT at all?
A small business with annual turnover of ₦100 million or less and total fixed assets of no more than ₦250 million is exempt from registering for, charging, filing and remitting VAT. Professional service providers are excluded from this relief, so a law firm or consultancy with ₦40 million turnover still charges VAT. A qualifying small business can opt into VAT by written notice, which may make sense if most of its customers are VAT-registered and it wants to recover input VAT.
Some supplies are also suspended from VAT for now: petroleum products, renewable energy equipment, CNG, LPG and other gaseous hydrocarbons. VAT will apply to them later, on a date the Minister of Finance sets. That is a budget risk worth flagging for 2027.
What this means for your business
- Check supplier invoices. Any invoice showing VAT above 7.5% is wrong. Query it before you pay, and do not claim the excess as input VAT.
- Do not reprice on rumour. A price list that says "VAT increase" invites customer disputes and gives the NRS a reason to look closer.
- Map your supplies. List what you sell and buy, and mark each line as standard-rated, zero-rated, exempt or suspended under the new Act. Most VAT surprises this year come from a line that changed category.
- Budget 2027 at 7.5%, but model the end of the suspension on fuel and gas if you run generators or a fleet.
FAQ
Is VAT 10% in Nigeria now? No. The 10% figure came from the original reform bills. The Senate rejected it in May 2025, and the Nigeria Tax Act 2025 kept the rate at 7.5%.
Will Nigeria's VAT rate increase in 2027? No increase has been passed. The rate is set in the Nigeria Tax Act, so any change would need an amendment by the National Assembly. Until then, plan at 7.5%.
Is food VAT-free in Nigeria in 2026? Basic food items are zero-rated from 1 January 2026, so no VAT is charged on them. Processed or restaurant food is a different matter, so check each product line.
Not sure which of your supplies changed VAT category on 1 January? VOG Global Consult reviews VAT positions, invoices and returns for businesses across Nigeria. Contact our team in Area 10, Garki, Abuja, or visit vog.global to book a VAT health check.