Claiming input VAT in Nigeria after the 2025 Act
Which purchases now carry claimable input VAT in Nigeria, the five-year window, the invoice you need, and the purchasing gaps to watch in Achekam.
By Achekam · · 5 min read · For Running a business businesses in Nigeria
For years, Nigerian businesses learned to treat VAT on many purchases as a plain cost. VAT paid on a new delivery van, on a lawyer's fees or on an IT consultant's invoice could not be set against the VAT charged to customers, so it sat in expenses or in the asset's cost.
The Nigeria Tax Act, 2025 changed that. Input VAT on services and on capital assets can now be claimed, which matters to any business that buys equipment or pays for professional help. The change comes with conditions, though: the purchase has to be for making taxable supplies, it has to be backed by a proper VAT invoice, and the claim has a time limit. This article explains each condition and how to record purchases so the claim holds up.
Services and capital assets now count
The NRS says input VAT on capital expenditure and services is now fully recoverable. Its information circular on the VAT changes puts it more broadly: input VAT may be claimed on all taxable supplies, including goods, services, intangibles and capital assets. Where input VAT for a month exceeds output VAT, the NRS says the taxable person may use the excess as a credit against later months or claim a refund.
The Act itself sets the VAT rate at 7.5% on the value of all taxable supplies, subject to the exempt and zero-rated supplies it lists. So the input VAT on a properly invoiced Nigerian purchase will normally be 7.5% of its value. The NRS works through examples at that rate in its VAT information circular, which also covers time and place of supply, withholding agents and monthly filing.
Only for taxable supplies, only with a valid invoice
Two conditions decide whether a particular purchase qualifies.
The purpose. The NRS says a registered person may deduct input VAT only where it was incurred for making taxable supplies. A business that makes both taxable and non-taxable supplies may deduct only the proportion relating to its taxable supplies. The NRS is equally clear that input VAT on exempt supplies cannot be claimed. A school that also runs a uniform shop, or a clinic that also sells cosmetics, will need a sensible way to split its shared costs.
The paperwork. The NRS says every input VAT claim must be supported by a valid VAT invoice. The Act lists what a VAT invoice contains, including the supplier's tax ID, a sequential invoice number, the supplier's name and address, its registration number, the date of supply, the purchaser's name, the gross amount, and the VAT charged with its rate. A till slip with a total and nothing else is not that document. The detail is in what a Nigerian VAT invoice must show.
Five years from the period it was incurred
The NRS says input VAT must be deducted within five years from the tax period in which it was incurred. PwC's summary of Nigerian taxes describes the same window as five years after the end of the period in which the tax was incurred, and the Act words it that way too.
Five years sounds generous, but it is not an invitation to leave claims for later. Invoices get lost, suppliers close and staff move on. The cleanest practice is to claim input VAT in the return for the month the invoice arrives, which is due with the rest of the month's VAT by the 21st of the following month; see VAT return due dates and nil returns.
Recording bills line by line in Achekam
In Achekam a business records supplier bills line by line with VAT. A bill without a purchase order waits for approval before it posts, and it can be paid in full or in parts from a chosen bank account. Recording each line separately matters for the input VAT claim: a bill that mixes a taxable item with an exempt one can be split so only the taxable line carries VAT.
Bills and orders that default to 15%
There is a gap Nigerian users must know about. Achekam's supplier bills and purchase orders do not yet use a Nigerian business's own VAT rate: they offer 15% or 0% and default to 15%. Neither choice is Nigeria's 7.5%.
Left alone, a bill would carry VAT at a rate no Nigerian supplier charged, and the input VAT in your books would not match the supplier's invoice. Until purchasing follows the country's rate, agree a method with your accountant. One approach is to enter the bill without VAT and post the input VAT shown on the supplier's VAT invoice by manual journal. In Achekam a business can post manual journals, an unbalanced journal or one dated in a closed month is refused, and a posted journal is corrected only by a reversal. Whichever method you choose, check the input VAT account against the supplier invoices every month before the return is prepared.
Cash payouts at the till
Small purchases paid from the till are a classic source of lost or doubtful claims. In Achekam, cash paid out at the till is recorded on the server and posts its own journal, with input VAT on a payout only when a tax invoice number is given. That is a useful discipline: no invoice number, no VAT claim. Teach cashiers to ask for a proper VAT invoice when they pay a supplier from the drawer, and to enter its number.
Before you claim: a short review
- Is the purchase for taxable supplies? If it serves exempt sales, the VAT is a cost.
- Is there a valid VAT invoice with the supplier's tax ID, invoice number and VAT shown?
- Is the VAT 7.5%? Anything else needs a question to the supplier, or a correction in your books.
- For mixed use, is the taxable share worked out and the working kept?
- Is the claim inside five years from the period the VAT was incurred?
- Does the input VAT account agree with the invoices on file?
A claim that passes those six questions is one you can defend if the NRS asks for the invoices behind it.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
