Understanding Sections 144–151 of the Nigeria Tax Act 2025. The Nigeria Tax Act (NTA) 2025 introduces a harmonised and modernised approach to Value Added Tax (VAT), aligning Nigeria’s VAT system with global best practices and resolving several ambiguities that have historically led to disputes between taxpayers and tax authorities.
Sections 144–151 of the Act form the backbone of this reformed VAT framework, providing clarity on the imposition, scope, timing, value, and administration of VAT, including the treatment of non-resident suppliers in a rapidly expanding digital economy.
This article presents a detailed and practical explanation of these provisions to assist taxpayers, administrators, and professionals in navigating their obligations under the new law.
Imposition and Scope of VAT (Sections 144–145)
Section 144 establishes the foundation of VAT by confirming that the tax is imposed strictly in accordance with the provisions of Chapter Six of the Act. Section 145 further extends the scope by providing that—except for supplies specifically exempted—VAT applies to all taxable supplies in Nigeria. This includes:
The sale of goods,
The provision of services, and
The use, exploitation, or transfer of intangible rights (incorporeals).
Together, these provisions reinforce VAT as a broad-based consumption tax, ensuring that the tax applies to virtually every economic transaction unless expressly exempted.
Determining When a Supply is Made in Nigeria (Section 146)
Section 146 deals with the core question of tax jurisdiction—when is a supply considered taxable in Nigeria? The Act adopts the destination principle, meaning VAT is charged where the goods, services, or rights are used, consumed, or exploited.
a. Goods
A supply of goods is deemed to occur in Nigeria when:
The goods are physically present, imported, assembled, or installed in Nigeria, or
The beneficial owner is a taxable person in Nigeria and the goods or rights are situated or exercisable within Nigeria.
b. Services
A service is taxable in Nigeria if:
It is provided to and consumed by a person in Nigeria, irrespective of the location of the service provider; or
It relates to immovable property located in Nigeria, such as engineering, valuation, or architectural services.
c. Incorporeal (Intangible Rights)
Intangible supplies are taxable if:
The rights are exploited by a person in Nigeria,
Registered in Nigeria,
Assigned to a Nigerian person, or
Connected to a physical asset located in Nigeria.
These rules ensure VAT applies to digital, cross-border, and intangible transactions, preventing revenue leakage in an increasingly digital economy.
See Also: Stamp Duties under the Nigeria Tax Act 2025: A Modern Framework for Legal and Fiscal Compliance
Time of Supply: When VAT Becomes Chargeable (Section 147)
Section 147 provides clarity on the timing of VAT liability—the moment the tax becomes due. A taxable supply occurs at the earliest of:
- Issuance of an invoice or receipt,
- Delivery or availability of goods for use,
- When payment becomes due,
- When payment is received.
- For connected persons where invoices are not issued, the Act prescribes alternative timing triggers, such as commencement of service or removal of goods.
The Act also introduces special rules for:
- Rental agreements and periodic payments,
- Construction, assembly, and manufacturing contracts with phased payments,
- Instalment credit agreements.
- Each instalment or progressive payment is treated as a separate supply, ensuring that VAT is accounted for as economic benefits arise.
VAT Rate and Value of Taxable Supplies (Sections 148–150)
Section 148 confirms the VAT rate at 7.5%. Sections 149 and 150 define the value upon which VAT is calculated.
a. Value of Supply (Section 149)
Where consideration is monetary, VAT is calculated on the amount that equals the consideration plus VAT.
Where consideration is non-monetary, market value applies.
For mixed transactions, only the portion attributable to the taxable supply is used.
Connected person transactions must be valued at market value, ensuring fairness and preventing transfer-pricing abuses within VAT.
b. Value of Imported Taxable Supplies (Section 150)
For imports, the value includes:
The price of the supply,
Taxes and duties (excluding VAT),
Commission, packaging, transport, and insurance up to the point of entry.
This ensures that VAT on imports reflects the true landed cost of the goods or services.
VAT Obligations for Non-Resident Suppliers (Section 151)
One of the most transformative provisions is Section 151, which addresses VAT on supplies made by non-resident companies, especially in the digital economy.
- Key VAT Duties of Non-Residents
- A non-resident person who makes taxable supplies to Nigeria must:
- Register for VAT,
- Include VAT on its invoices, and
- Comply with filing and payment obligations.
- Reverse Charge Mechanism
- Where a non-resident supplies goods or services from outside Nigeria:
- The Nigerian recipient must withhold and remit the VAT to the FIRS.
- This ensures effective collection even where the foreign supplier is beyond the jurisdiction of Nigerian tax authorities.
- Appointment of Collecting Agents
- The FIRS may appoint any person—including a non-resident digital platform—to collect and remit VAT. Where such a platform is appointed:
- The Nigerian purchaser no longer withholds VAT,
- Except where the appointed platform fails to collect.
- Online and Digital Imports
- Where taxable goods are imported through online platforms and VAT has already been collected:
- The goods are not subjected to additional VAT at the port once proof of payment is provided.
- This prevents double taxation and supports modern e-commerce systems.
Conclusion
Sections 144–151 of the NTA 2025 constitute a comprehensive and modern VAT regime that expands the tax net to include digital, intangible, and cross-border supplies while simplifying compliance for both local and foreign taxpayers.
By clarifying when supplies are taxable, when VAT becomes due, how the value is determined, and how non-resident suppliers must comply, the Act strengthens Nigeria’s VAT framework and aligns it with international best practices.
For taxpayers and professionals, understanding these provisions is essential for accurate compliance, effective tax planning, and avoiding penalties in the evolving Nigerian tax landscape.
Olatunji Abdulrazaq CNA, ACTI, ACIArb(UK)
Founder/CEO, Taxmobile.Online
