The value Nigerian import VAT is charged on
Which costs make up the value Nigerian VAT is charged on when goods are imported, how the VAT is recovered, and how to post an import in the books.
By Achekam · · 5 min read · For Running a business businesses in Nigeria
An importer's landed cost is a stack of charges: the price paid to the overseas seller, taxes and levies abroad, freight, insurance, the clearing agent's commission, Nigerian duties and levies. VAT is charged on top of that stack, and the question that trips people up is which layers sit underneath it.
Get the value wrong in one direction and the business underpays VAT on every container. Get it wrong in the other and it overstates its costs, or claims input VAT it cannot support. This guide sets out the value the NRS describes, what falls outside it, how the VAT comes back as input tax, and how to post an import cleanly.
The import value: price, duties and levies, and costs to the port
The NRS's circular on the changes in the administration of VAT, Information Circular No. 2026/05, covers the value of supply alongside time and place of supply and input VAT. It says the VAT value of imported taxable supplies is the total amount of the imported supply including taxes, duties and other levies charged outside or within Nigeria, excluding VAT imposed under the Nigeria Tax Act, plus incidental costs such as commission, parking, transportation and insurance up to the port or point of entry.
Read that as three layers:
- The supply itself: the amount paid for the goods.
- Taxes, duties and levies: those charged abroad and those charged in Nigeria, other than Nigerian VAT itself.
- Incidental costs to the border: commission, parking, transport and insurance up to the port or point of entry.
The NRS gives the standard VAT rate as 7.5%, with certain goods and services zero-rated or exempt, and the Nigeria Tax Act charges VAT at that rate on the value of taxable supplies. An import of zero-rated or exempt goods is treated accordingly, so check the item before working out any VAT.
A worked example in words
A Kano distributor buys machine parts from a supplier in Asia. The VAT value is the price on the supplier's invoice, plus any taxes or levies charged abroad, plus the customs duty and levies due in Nigeria, plus the sea freight and insurance to the port, plus the clearing agent's commission and port parking. VAT at the standard rate is worked out on that total. The truck that later carries the container from the port to the Kano warehouse is a cost of the business, but it comes after the point of entry the NRS describes.
What stays out of the value
Two things are outside the base. The first is Nigerian VAT itself: the NRS excludes VAT imposed under the Act, so VAT is not charged on VAT. The second follows from where the NRS draws the line. Its list of incidental costs runs up to the port or point of entry, so charges incurred after the goods have entered, such as inland haulage and warehouse handling, are not part of the list it gives. They still belong in your cost of stock, and some may carry VAT of their own from local suppliers.
Import VAT as input VAT
Import VAT is not necessarily a cost. Under section 156(5) of the Nigeria Tax Act, input tax is deductible only so far as it was incurred for making taxable supplies, with only the taxable proportion deductible where supplies are mixed, and within five years after the end of the tax period in which it was incurred. A distributor selling standard-rated goods will ordinarily claim the VAT on its imports against its output VAT. Where input VAT exceeds output VAT, the Act lets the excess be carried forward as a credit, with a refund on request. Claiming input VAT in Nigeria covers the claim itself.
Imported equipment and capital allowances
Equipment raises a second question. The NRS's circular on the ascertainment of company income tax says that where VAT, import duty or a levy is due on qualifying capital expenditure, capital allowance is granted only to the extent that the VAT has been charged and the duty or levy paid. Its illustration is a company that did not pay the VAT due on a motor vehicle and so cannot claim capital allowance on it.
For an importer, that turns the clearing documents into tax evidence. Keep proof that the duty, levies and VAT on each imported asset were paid, filed with the asset's purchase records.
Posting an import in Achekam
Achekam 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 the bank account you choose. Supplier bills and purchase orders do not yet use a Nigerian business's own rate: they offer 15% or 0% and default to 15%. So:
- Record the overseas supplier's bill at 0%, since it carries no Nigerian VAT.
- Record the freight, insurance, clearing and other local charges as bills from those suppliers, again choosing the rate line by line with care.
- Post the import VAT you paid by manual journal to your input VAT account. Achekam refuses an unbalanced journal or one dated in a closed month, and a posted journal is corrected only by a reversal.
- For equipment, add the asset to the fixed-asset register at cost. It is then depreciated monthly by straight line or reducing balance, with a journal each month. The register does not work out tax allowances, so capital allowances are computed separately, and it is not part of Business Essentials.
Parts for resale raise their own costing questions; costing imported parts looks at them for motor dealers.
A landed-cost and VAT checklist
- Supplier invoice, freight and insurance documents for each shipment
- Duty and levy assessments, with proof of payment
- The VAT value worked out on price, duties, levies and costs to the port
- Evidence the import VAT was paid
- Input VAT posted in the month it can be claimed
- Equipment entered in the asset register, with clearing papers attached
Take your last shipment and rebuild its VAT value from the papers. If the figure on file differs, you will know which layer was left out.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
