When Nigerian VAT is due: the time of supply
The four events that fix when a Nigerian supply becomes liable to VAT, why the invoice goes out on supply, and how to keep each month's cut-off clean.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
Many small businesses in Nigeria run VAT on a cash basis without meaning to. They charge VAT when the customer pays, and they put it in the return for the month the money arrived. It feels sensible: why pay tax on money you have not received?
The law looks at it differently. Nigerian VAT attaches to the supply, and the Nigeria Tax Act, 2025 sets out when a supply is treated as having happened. That moment decides which month's return the VAT belongs in, and it often comes before the customer pays. This article explains the rule, what it means for invoices and deposits, and how to keep month-end cut-off straight.
The earliest of four events
The NRS explains the rule in its circular on the changes in the administration of VAT, Information Circular No. 2026/05, which replaces the earlier FIRS circular of 2022 and also covers place of supply, value of supply and monthly filing. As a general rule under section 146 of the Act, it says a taxable supply is treated as having taken place at the earliest of:
- the date the supplier issues an invoice or receipt;
- the date the goods are delivered or made available to the customer;
- the date payment becomes due; or
- the date payment is actually received.
Whichever of these comes first fixes the time of supply. Nothing that happens later moves it.
Three quick cases
- Goods delivered on credit. A wholesaler delivers stock on the 28th and invoices on the 3rd of the next month, with payment due in a month. Delivery came first, so the supply belongs to the month of delivery.
- Services billed in advance. A training company invoices a course in March that runs in April. The invoice came first, so March holds the VAT.
- Cash before anything else. A customer pays in full before an invoice is raised or the goods leave the store. Receipt of payment is the earliest event.
An invoice on supply, paid or not
The NRS says a VAT invoice must be issued on supply, whether or not payment is made at the time of supply. That closes the gap the cash-basis habit relies on. Holding back an invoice until the customer pays does not hold back the VAT when delivery has already happened, and it leaves the customer without the document it needs.
Under the Act, VAT is charged at 7.5% on the value of taxable supplies, subject to the exempt and 0% items it lists. The invoice should show the VAT at that rate, or the 0% or exempt treatment, from the start. The full list of what it must carry is in the details a Nigerian VAT invoice must carry.
Which month's return the VAT falls into
Once the time of supply is fixed, the return follows. The NRS says a taxable person must file VAT returns and remit VAT collected within 21 days of the month following the month of the transaction. A supply treated as made on the last day of April therefore sits in the April return, due in May, even if the customer pays in June. The filing rhythm, including nil returns, is covered in VAT return due dates and nil returns.
The cash consequence is real. A business that supplies on long credit terms pays VAT to the NRS before it has collected the VAT from its customer. Credit terms and collection effort need to reflect that.
Deposits and advance payments
Because receipt of payment is one of the four events, money received before delivery or invoicing can bring the time of supply forward. A deposit on a custom order, a retainer paid before work starts, or a prepayment for goods not yet in stock are all worth looking at closely. How a part payment is treated against the full supply is a point to confirm with your adviser against the circular; what is clear is that waiting for final delivery before thinking about VAT is risky.
Issuing invoices in Achekam
In Achekam, customer invoices start as drafts that can be changed or deleted. Issuing one takes the next number in the business's sequence and posts it to the ledger as debtors, sales and output VAT, so the issue date is what places the VAT in a month in your books. When an invoice line states no rate, VAT is taken at the rate in force on the invoice date, and a credit note uses its original invoice's date and tax codes.
Two practical points follow. First, date the invoice for the time of supply, not for the day someone got round to typing it. Second, Achekam does not offer pro-forma invoices, so if a customer needs a document to arrange an advance payment, decide with your accountant whether a full invoice should be issued at that point.
Months in Achekam can be soft-closed, hard-closed and locked, and a closed month refuses postings from every source. Closing each month once its returns are done stops a late invoice from slipping back into a period already reported.
Month-end cut-off check
- List deliveries made in the last days of the month and confirm each one is invoiced in that month.
- List payments received in the month for goods or services not yet invoiced.
- Check invoices raised in advance of the supply are in the month of the invoice.
- Compare output VAT in the ledger with the VAT on the return.
- Close the month once the return is filed.
Pick one recent month and trace five sales from delivery note to invoice to return. If the dates line up, your process works; if they do not, you have found where VAT is drifting between months.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
