Value-added tax on imported services (Part 1)

By Helen E. Ijewere, Saffron Professional Services

Value-added Tax (VAT) is charged at 5% and is payable on the supply of all goods and services that are consumed within, and enter Nigeria, other than those goods and services listed as exempt in the First Schedule to the VAT Act.

The VAT Act defines an imported service as “service rendered in Nigeria by a non-resident person to a person inside Nigeria.” VAT must be calculated on the invoice supplied by the foreign supplier of services such as consultancy, patent, royalty and franchise services, among others.

The FederaI Inland Revenue Service (FIRS) has always insisted on VAT on Imported Services, relying on Section 2 of the VAT Act. In February 2016, The Tax Appeal Tribunal (TAT), Lagos Division in Vodacom Business Nigeria Ltd vs FIRS ruled that the FIRS was correct in assessing VAT on a contract for supply of satellite network bandwidth capacities by a non-resident company based in The Netherlands.

The TAT applied the Destination Principle as a guide. It said that the services provided were an intangible asset that was not listed on the VAT Exemption List, and so, was not an exempted service. The TAT ruled that the Nigerian company had the responsibility to ensure that the non-resident company registered for VAT, included the VAT on its invoice, and in the absence of the registration, the Nigerian company that benefitted from the service must selfcharge and remit the VAT to the FIRS.

Helen E. Ijewere

Helen E. Ijewere

Nolands Nigeria, Lagos, Nigeria
T: +234 802 318 2843
E: E: This email address is being protected from spambots. You need JavaScript enabled to view it.; W:

Published: October 2016 l Photo: Igor Groshev -


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