Nigeria Tax Act 2025 Eases VAT Burden on Businesses

For several years, businesses in Nigeria faced challenges under the now-repealed Value Added Tax (VAT) law, which imposed a 7.5% VAT on purchases without allowing deductions for operational expenses. This created a financial burden as companies could not recover VAT on essential services and capital assets, leading to increased prices for consumers.

The old law, particularly Section 17 of the VAT Act, limited input VAT recovery to only two categories, forcing businesses to absorb additional costs. However, with the introduction of Section 155 of the new Nigeria Tax Act, 2025, this restriction has been lifted, enabling businesses to recover input VAT on a broader range of expenses.

This legislative change aligns Nigeria with global best practices and aims to alleviate financial pressures on businesses, fostering a more favorable economic environment.