You are building your business. You have started to notice that bigger companies add "VAT 7.5%" at the bottom of their invoices. Other freelancers seem to do it. Maybe you should too?
Before you add that line to your next invoice, read this. It will take three minutes and could save you a serious problem.
Does your business earn ₦100 million or more per year in sales?
That is the number. ₦100 million per year is the threshold set by the NRS (Nigeria Revenue Service) — the government body that manages tax collection in Nigeria.
It works out to roughly ₦8.33 million per month in revenue.
Think about your own business. If you are a tailor doing alterations in Surulere, a caterer doing small family events in Ibadan, or a freelance graphic designer just starting out — you are almost certainly below this threshold.
If you are a mid-sized agency running campaigns for corporate clients, a consultant billing multiple companies every month, or a boutique with multiple locations and strong sales volume — you may be above it or approaching it.
The honest way to check: add up every naira your business received in the last 12 months. That is your annual revenue. Compare it to ₦100 million.
Fatima runs a tailoring business in Kano. She makes traditional outfits for weddings and events. In 2025, she made ₦8.4 million total — about ₦700,000 per month on average.
She is well below the ₦100 million threshold. She does not need to register for VAT.
She does not charge VAT on her invoices. She does not file monthly VAT returns. She simply focuses on running her business.
That is the correct approach. Anything else would be unnecessary — and potentially illegal.
① Register with the NRS — apply online or at your nearest NRS office. You need your TIN (Tax Identification Number), your CAC documents if you are registered, and your business bank details.
② Add VAT to your invoices — once registered, every invoice you send for taxable goods or services must include a separate 7.5% VAT line and your VAT registration number.
③ File a return every month — not quarterly, not annually. By the 21st of every month, you submit a form to the NRS showing how much VAT you collected and how much VAT you paid on your own purchases.
④ Keep all your receipts — any VAT you paid to your own suppliers can be deducted from what you owe to the NRS. Those receipts are money.
Do not charge VAT. Not even to look more professional. Not even because a client asked you to. If you are not registered, charging VAT is a tax offence.
Do not worry about it. You have nothing to file, nothing to remit. Just keep running your business. Check your revenue figure again every few months as you grow.
This happens more often than you would think.
A freelancer wants to look established, so they add "VAT: ₦37,500" to the bottom of their invoice. Their client is a company with a proper accounts department. The accounts team sees no VAT registration number. They flag it. The freelancer gets an uncomfortable phone call and has to reissue the invoice. Worse, if the client paid the VAT amount and the freelancer kept it, there is now a tax liability with no registration to back it up.
The rule is simple: no registration number = no VAT line on your invoice.
If you want to look professional, the answer is a clean, well-formatted invoice with your bank details, TIN, and a clear payment deadline — not a fake VAT charge.
This post covered the basics. The full guide explains registration step by step, how to file your monthly returns, input VAT and what you can deduct, and what happens if you've been operating without registration when you should have been registered.
Read the full guide: VAT for MSMEs in Nigeria
Lucrive generates compliant invoices for Nigerian businesses — with or without VAT, depending on your status. Start free at lucrive.io — pay via Paystack, bank transfer, USSD or card.
Sources & further reading
Tags: VAT Nigeria plain English, do I need to charge VAT Nigeria, VAT threshold Nigeria, MSME tax Nigeria