Excess input VAT: carry it forward or claim a refund
What a Nigerian business can do when input VAT exceeds output VAT: carry the credit forward or ask for a refund within the 12-month limit.
By Achekam · · 5 min read · For Running a business businesses in Nigeria
Some months the VAT you paid on purchases is larger than the VAT you charged on sales. It happens to a business that has just bought equipment, to an exporter whose sales are zero-rated, to a contractor whose government customers withhold the VAT on its invoices, and to anyone building up stock before a busy season.
The difference is money the NRS owes you, in effect. Nigerian law gives two ways to use it: keep it as a credit against later months, or ask for it back. The second route has a time limit that is easy to miss. This guide explains both, the deadlines on each side, and the bookkeeping that makes a claim stand up.
Carrying the credit into later months
The default route is the simplest. Under section 156(1) of the Nigeria Tax Act, 2025, by the due date for the return a taxable person either remits output VAT in excess of input VAT or carries excess input VAT forward as a credit against later months. The NRS's VAT circular says the same in plainer terms: input VAT may be claimed on all taxable supplies, including goods, services, intangibles and capital assets, and where input VAT exceeds output VAT the excess may be used as a credit against subsequent months or claimed as a refund.
Carrying forward needs no application. The credit simply reduces what you pay in the months that follow. For a business whose excess is a one-off, such as the month a new delivery van was bought, that is usually the sensible choice.
Remember that input VAT counts only where the law allows it. Section 156(5) limits the deduction to input tax incurred for making taxable supplies, the taxable share where supplies are mixed, within five years after the end of the tax period in which it arose. Claiming input VAT in Nigeria covers which purchases qualify.
Asking for a refund instead
Section 156(2) allows a refund on request. A refund suits a business whose excess keeps recurring, because a credit that is never used up is cash tied up indefinitely. An exporter with mostly zero-rated sales is the classic case.
The NRS's Guidelines on Tax Refund, Information Circular No. 2026/17, set out how to apply. A refund application is made through the NRS tax administration solution, or by application giving the applicant's name and Tax ID, the basis of the claim, the tax type, the amount, the period and nature of the transactions, and a declaration signed by a director, principal officer or authorised officer, with supporting documents attached. For VAT, the guidelines direct refund applications to the relevant Executive Director rather than the Executive Chairman who receives other refund claims. The NRS Guidelines on Tax Refund explain the cases that qualify and the application steps in full. Wider refund eligibility is covered in when a Nigerian taxpayer is due a refund.
The 12-month limit and the 30-day period
The deadline is the part to diarise. The NRS says a VAT refund request must be submitted within 12 months from the date of the transaction that generated the claim, otherwise the right to the refund is forfeited. The guidelines cite no section of the Act for that limit, but they are the NRS's stated position.
On the other side, PwC's tax summary for Nigeria says the government must complete a VAT refund within 30 days, after which the amount can be offset against other tax liabilities due to the Federal Government. That matches the NRS circular's 30 days from a valid request to refund or set off.
Note what the 12 months run from: the transaction, not the end of your financial year. A large purchase early in the year can be close to its limit by the time the year-end accounts are drafted.
When customers withheld your output VAT
Contractors to government bodies and to appointed agents often see their output VAT withheld at source, which is a common reason for a standing excess. The NRS's Guidelines on the Withholding of VAT explain how to report it. A supplier whose output VAT was withheld reports the total output tax on all its supplies in its monthly return, deducts the output tax withheld at source to arrive at net output tax, and deducts input tax on all supplies, including those whose output tax was withheld. Any excess input VAT can then offset future VAT or be the subject of a refund request.
Keeping the VAT control account reconciled
A refund claim is only as strong as the ledger behind it. In Achekam, the general ledger lists every posted line, and the trial balance shows each account for all time, for a period or at a date, and says whether debits equal credits. Reconcile the input and output VAT accounts to your returns each month, so that the credit carried forward on the return is the same figure the books show.
Once its rules are approved, Achekam's Revenue Service Centre computes Nigerian VAT alongside company income tax, withholding tax, capital gains and stamp duty. Every Nigerian tax figure in its rule book was loaded under review, and nothing is computed until an Achekam platform administrator approves it. A Nigerian return in Achekam is prepared by one person, reviewed by a second and approved by a third, after which its figures are frozen; an amendment becomes a new version.
Month-end steps for a business in credit
- Agree input and output VAT to the trial balance.
- Note the credit carried forward and the month each part of it arose.
- Flag any part approaching 12 months from its transaction date.
- Decide, with your accountant, whether to keep carrying it or apply for a refund.
- Keep invoices, import papers and withholding evidence filed with the return.
A credit that sits unexamined for a year can lose its refund right without anyone noticing. A short monthly note of where the excess came from is enough to keep that choice open.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
