Nigeria’s new tax laws are giving businesses a broader avenue to recover Value Added Tax (VAT) paid on their operating costs, a change that could reduce tax costs for companies.
The changes expand the categories of expenses eligible for VAT recovery and clarify documentation requirements, allowing manufacturers, service providers and traders to claim back more of the VAT paid on purchases.
The revision addresses long-standing complaints that strict rules had limited refunds and left businesses with unrecoverable costs.
Oladele Odugbemi, a finance and accounting professional, said these restrictions had contributed to “low input VAT recovery, particularly on services and capital expenditure” before the 2025 reforms broadened the mechanism.
The reforms therefore change the question for businesses from simply how much VAT they owe to how much VAT they can legitimately recover, he added.
