Value Added Tax
Value Added Tax (VAT) is a tax on spending. The tax is borne by the final consumer of goods and services and it is invoice based. The VAT element is to be separately indicated in the tax invoice. The tax presently is at a flat rate of 5%.
The tax is collected on behalf of the Government by businesses and organizations which have registered with the FIRS’s Integrated Tax Office for VAT purposes nearest to them or their operating bases. Branches of such businesses and organizations are to register independently in their own areas of operation and they are classified as “registered persons”. A consumer will pay 5% on goods and services purchased but, can claim credit for input tax when sold.
VAT returns and payments are normally made monthly to the Integrated Tax Office where registered on or before 30th day of the month following that in which the supply was made through proper keeping of records and accounts of all business transactions.
No individual, business, organization or government agency is exempted from the tax. Only goods and services and specifically specified activities are exempted.