Select Page
Under the Nigerian Value
Added Tax Act 2007 (the “Act”), “imported services” are liable to the
imposition of value added tax (“VAT”) as they are not specifically listed under
the tax-exempt items. The Act defined “Imported service” as service rendered in
Nigeria by a non-resident person to a person inside Nigeria
.

As a general rule, a
foreign company which supplies goods and services in Nigeria without a physical
presence in Nigeria is neither required to register for VAT with the Federal
Inland Revenue Service nor charge/issue a VAT invoice.  This is because
the foreign company cannot be said to be carrying on business in Nigeria, and
has no physical presence in Nigeria. This position was supported by the Abuja
Zone of the Tax Appeal Tribunal (established to decide tax disputes) (“TAT”) inGazprom
Oil & Gas Ltd v. Federal Inland Revenue Service (“FIRS”).
Consequently,
the consumers of such goods and services in Nigeria were not subject to pay
VAT.


However, the Lagos Zone of
the TAT in Vodacom Business Nigeria Ltd v. FIRS supported the
decision in Gazprom above, but only to the extent that a foreign company which
supplies goods and services in Nigeria without a physical presence in Nigeria
is neither required to register for VAT with the Federal Inland Revenue Service
nor charge/issue a VAT invoice. It however dissented with the part of the
decision that stated that the Nigerian consumers of such imported services are
not subject to VAT. It relied on the destination principle in reaching this
conclusion. By this recent decision, it appears that consumers of imported
services are obligated to pay VAT in Nigeria.

As such, it is expect that
the FIRS will seek to enforce this decision pending the determination of the
appeal of Vodacom to the Federal High Court.
Ed’s Note- This article
was originally published here