Nigeria seeks to ease tax uncertainty with new VAT rules

Nigeria has set up an inter-ministerial committee to draft a new Value Added Tax (VAT) Modification Order, the latest step in implementing the country’s biggest tax overhaul in decades as the government seeks to provide greater certainty for businesses and investors.

The committee, inaugurated in Abuja on Friday by Finance Minister Taiwo Oyedele, will develop a new framework for VAT exemptions and zero-rated goods under the Tax Reform Acts that came into force on January 1.

The order is expected to clarify how the new tax laws will be applied across sectors, including which goods and services qualify for VAT exemptions or zero-rating — an issue closely watched by manufacturers, importers and other businesses because of its implications for production costs and pricing.

“The Tax Reform Acts represent the most comprehensive reform of Nigeria’s tax system in decades,” Oyedele said at the inauguration.

“They simplify our tax laws, improve certainty, enhance competitiveness, protect vulnerable Nigerians, and position our economy for sustainable growth.”

The minister said the committee’s task was not to recreate the previous VAT Modification Order, which has been superseded by the new legislation, but to produce “a modern, coherent and forward-looking” order that aligns with the reforms.

The committee has been directed to review the country’s VAT administration framework, engage public and private sector stakeholders, prepare schedules of VAT-exempt and zero-rated supplies, draft the new order and recommend legislative amendments where necessary.

Oyedele said the framework should support industrialisation, investment, exports, innovation, food security and the energy transition while preserving the integrity of the VAT system.

The panel has six weeks to submit a draft VAT Modification Order 2026, implementation guidelines, schedules of exempt and zero-rated supplies with corresponding Harmonised System (HS) codes, and a report on stakeholder consultations.

Its members include representatives of the Federal Ministry of Finance, the Nigeria Revenue Service, the Nigeria Customs Service, the Federal Ministry of Industry, Trade and Investment, the Joint Revenue Board, the Manufacturers Association of Nigeria, the Tax Advisory Committee and the Tax Justice and Governance Platform.

The Tax Reform Acts, which took effect this year, are designed to simplify Nigeria’s tax regime, improve compliance, reduce the cost of doing business and strengthen the country’s appeal to investors.

The VAT Modification Order is expected to provide much of the operational detail businesses will need to implement the new rules.