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Here are 10 key facts which will help you to understand the implementation of VAT in Nigeria.
(i) VAT is a tax on spending. The tax is borne by the final consumer of goods and services because it is included in the price paid.
(ii) The tax is at a flat rate of 5%.
(iii) The tax is collected on behalf of the Government by businesses and organizations which have registered with the Federal Inland Revenue Services (FIRS VAT Directorate) for VAT purposes.
(iv) A business or organization which has registered for VAT is classified as a "registered person". Such persons will pay 5% VAT on goods and services purchased but can claim credit for this tax (called input tax) when sold.
(v) 5% VAT (called output tax) is included in the price of all goods and services supplied by registered persons.
(vi) The registered person has to make regular VAT returns and either pays to, or receives from the FIRS (VAT Directorate), the difference of the input tax and the output tax. 'Paragraph 10 shows you how to complete the VAT returns.
(vii) VAT returns (and payments) are normally made monthly to the local VAT office on or before 14th day of the month next following that in which the supply was made.
(viii) To claim a credit for input tax, a registered person must hold a "Tax invoice".
(ix) Records and accounts have to be kept.
(x) FIRS (VAT Directorate) provides a free information and advisory service to help you with VAT.
The Directorate of VAT Federal Inland Revenue Service Federal Ministry of Finance Complex Cadastral Zone A3 'B' Block, 2nd Floor Garki‑Abuja, Nigeria. Tel: 09‑2340939, 09‑2340603 Fax: 09‑2340670.
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