How to Calculate VAT on Imported Goods in Nigeria

Have you ever asked the question – How is VAT calculated on imported goods in Nigeria? If you have, then you fill find the answer in this article. But first you need to know what VAT means. VAT is an acronym for Value Added Tax.

So What is Value Added Tax (VAT)?

According to the Federal Inland Revenue Service (FIRS), VAT is governed by the Value Added Tax Act Cap V1, LFN 2004 (as amended). What this simply means is that all goods and services (produced within or imported into the country) are taxable except those specifically exempted by the VAT Act.

By definition, Value Added Tax (VAT) is a form of tax imposed on the supply of all goods and services by a country’s government. The VAT rate in Nigeria is currently 7.5% (raised from 5% on 1st Feburary 2020).

VAT is charged and paid on the supply of all goods and services in Nigeria except those specifically exempted by the Value Added Tax Act (VAT Act) .

When you import goods into Nigeria, the VAT due on the goods is calculated on the total cost of the goods which includes transport costs, insurance costs and any applicable Customs Duty.

Here is the formula:

Formula: VAT = 7.5% x (CIF + ID + Surcharge + CISS + ETLS)

Hence, to calculate VAT on imported goods, you need to know the H.S Code of the goods, the CIF, Surface Duty, CISS and ETLS due for the import.

You can read our comprehensive guide on How to Calculate Customs Import Duty in Nigeria

So let’s say we have a 1x20ft container load of Prepared Baking Powder imported by Mr Taiwo Adesanya from China that is VATable and he has the following as the figures already converted to Naira for the different taxes and levies (CIF + ID + Surcharge + CISS + ETLS):

Note: Prepared Baking Powder has the HS Code 2102300000 (5% Duty rate with 7.5% VAT)

Read: How to Calculate Customs Import Duty in Nigeria learn how to convert these taxes and levies to Naira

CIF: ₦6,176,010.00

CISS: ₦61,760.00

DTY: ₦308,801.00

SUR: ₦21,617.00

ETL: ₦30,881.00

VAT: ?

To calculate the VAT Mr Adesanya will pay for importing Prepared Baking Powder into Nigeria, we sum up all the taxes and levies above and then do the 7.5% of the total is the VAT.

Hence (CIF + ID + Surcharge + CISS + ETLS)

VAT = ₦6,176,010.00 + ₦61,760.00 + ₦308,801.00 + ₦21,617.00 + ₦30,881.00

= ₦6,599,069.00

= 7.5% X 6,599,069.00

= ₦494,930.00

The VAT payable to Nigerian government by Mr Adesanya for importing Prepared Baking Powder into Nigeria is ₦494,930.00


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