Zero-rated goods and services under Nigerian VAT
The goods and services Nigeria's 2025 tax law zero-rates, how zero-rated differs from exempt, and how to code each line on a Nigerian invoice in Achekam.
By Achekam · · 4 min read · For Running a business businesses in Nigeria
A pharmacy in Ibadan sells paracetamol, baby formula, hand cream and phone airtime over the same counter. A private school in Port Harcourt charges tuition, sells textbooks and runs a canteen. For both, the VAT question is not one rate for the whole business but a decision on every line: standard, zero-rated or exempt.
Getting that decision wrong in one direction overcharges customers. Getting it wrong in the other leaves you owing VAT you never collected. This article walks through what the Nigeria Tax Act 2025 zero-rates, why zero-rated and exempt are not interchangeable, and how to code each line in Achekam.
Basic food, medical and pharmaceutical products
The Nigeria Tax Act 2025 came into force on 1 January 2026. Section 187 of the gazetted text lists the supplies charged VAT at a rate of nil, rather than at the standard 7.5%.
At the top of the list are basic food items and medical and pharmaceutical products. For a supermarket, a provisions store or a pharmacy, these are likely to be a large share of daily sales, which makes the line-by-line coding worth setting up carefully once.
The wording matters. "Basic" food is not every food, and a cosmetic or wellness product sold in a pharmacy is not automatically a pharmaceutical product. The Act and the NRS's guidance draw those lines; your product list should follow them, not the shelf the item sits on.
Medical services and educational materials
The same section zero-rates medical services, and on the education side it covers educational books and materials and tuition from nursery to tertiary level.
For a clinic, that points to zero-rating consultations and treatment. For a school or college, tuition and the textbooks it supplies fall on the zero-rated list, while other things the school sells, such as a canteen meal or an event ticket, need their own decision. How a school sets this up in practice is covered in VAT on tuition in Nigeria.
Supplies made before 1 January 2026 remain under the repealed VAT Act, so an older invoice being corrected may follow different rules.
Fertilisers, electric vehicles and other listed items
The list goes further. Among the other zero-rated items in the gazetted text are fertilisers, exported services, and electric vehicles and their parts. Exported goods are zero-rated too, apart from oil and gas. Exporters have their own article: charging VAT on exports from Nigeria.
The NRS's own VAT page covers who must register and charge VAT, the monthly return, what a VAT invoice must show, and gives examples of zero-rated and exempt supplies alongside the rules on input VAT recovery. Read it next to the Act when you build your product list.
Zero-rated and exempt are different tax codes
Both put no VAT on the customer's invoice, so it is tempting to treat them as the same. They are not.
- A zero-rated supply is a taxable supply at a rate of nil. It belongs in your VAT return as a taxable supply, and the VAT you paid on the inputs used to make it stays part of your VAT position.
- An exempt supply is outside the charge. It carries no VAT, and the input VAT linked to it is generally not recoverable.
In a Nigerian workspace in Achekam, every invoice line carries one of five tax codes: standard, zero-rated, exempt, out of scope or reverse charge. Only standard lines carry VAT. Pick zero-rated for the items on the section 187 list, and exempt only for supplies the law exempts. These codes apply once the Nigeria pack is activated under Settings, Jurisdiction & regulators, on the invoice form under Accounting.
A line with no rate stated takes VAT at the rate in force on the invoice date, and a credit note reuses its original invoice's date and tax codes, so a refund on a zero-rated sale stays zero-rated.
One current limit for businesses with a till: a product marked Exempt in the Item Master is recorded at the till, and on the VAT return, as zero-rated. If you sell genuinely exempt items over the counter, tell your accountant, so that the return can be corrected for those sales until the till keeps the two apart.
Why zero-rated lines go through while standard lines may wait
Every Nigerian tax figure in Achekam's rule book was loaded "under review", and nothing is computed from a figure until an Achekam platform administrator approves it. While the Nigerian standard rate awaits that approval, Achekam refuses to charge standard-rate VAT on a Nigerian invoice and asks you either to choose a tax code without VAT or to wait.
Zero-rated lines carry no VAT, so they are not held up. A pharmacy whose invoices are mostly zero-rated medicines can keep invoicing those lines, while the occasional standard-rated item waits. Never switch a standard-rated item to zero-rated to get past the refusal: that would understate the VAT you owe. The refusal and the honest ways around it are explained in charging VAT while rates await approval.
Items to confirm with your adviser
Some products sit near the boundary, and it pays to settle them in writing once rather than case by case at the counter:
- food products that are processed or packaged, where "basic" is in doubt;
- health and beauty items sold in pharmacies;
- school charges other than tuition, such as transport, boarding and meals;
- services delivered partly to clients abroad;
- bundles that mix zero-rated and standard-rated items at one price.
For each one, record the decision, the reason and the section relied on, then set the tax code on the product or invoice template so staff do not decide afresh every time. Start with your best-selling items: if their codes are right, most of your VAT return is right.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
