Nigeria has introduced a requirement that foreign digital service providers meeting specific sales thresholds must register, charge and remit [Value-Added Tax (VAT)](https://en.wikipedia.org/wiki/Value-added_tax) at the standard 7.5% rate on supplies to Nigerian customers. The rule applies regardless of whether the supplier has a physical presence in the country, affecting individuals paying for streaming, businesses buying cloud storage, and firms purchasing online advertising.
**What services are taxed and at what rate?**
The 7.5% VAT covers a broad spectrum of electronically delivered services, including streaming and downloadable content, cloud computing and storage, online advertising, software as a service, online gaming, subscription‑based social media, video‑conferencing and certain e‑learning platforms. Marketplaces that facilitate ride‑hailing, travel bookings or similar digital transactions may also fall within the scope, depending on the exact nature of the service.
**What must a foreign provider do to comply?**
According to [PwC’s “VAT in Africa: Digital Services 2026”](https://www.pwc.co.za/en/assets/pdf/vat-in-africa-digital- services-2026.pdf), a non‑resident supplier is required to register for VAT if its annual sales to Nigerian customers reach, or are expected to reach, US$25,000 (or the equivalent in another currency). After registration, the provider must obtain a tax identification number from the [Nigeria Revenue Service (NRS)](https://www.nra.gov.ng), issue proper invoices, collect VAT on taxable supplies, file monthly returns and remit the tax before the 21st day of the following month.
**How is VAT calculated on a typical transaction?**
For illustration, a digital service priced at ₦10,000 before tax would attract a VAT of ₦750 (7.5%). The total payable by the customer would therefore be ₦10,750, assuming the provider adds the tax to the invoice. The final amount may vary depending on how the supplier structures the price and applies the tax.
**What happens if the provider does not collect VAT?**
The legislation also covers business‑to‑business transactions. If a foreign supplier fails to charge VAT, the Nigerian customer is obliged to self‑assess, calculate and remit the tax directly to the NRS. This places an additional compliance burden on companies that rely on overseas software, cloud infrastructure, digital advertising and other online tools.
**Are there any unresolved compliance issues?**
A notable grey area concerns electronic invoicing. While the framework broadly includes both Nigerian and foreign taxable supplies, the NRS has not yet issued detailed guidance for non‑resident suppliers. As of February 2026, mandatory e‑invoicing was limited to large taxpayers with annual turnover of at least ₦5 billion, without an explicit exemption for foreign entities. PwC advises affected firms to seek written clarification from the NRS to avoid potential penalties.
Overall, Nigeria's approach aims to bring cross‑border digital transactions into the VAT net, but the practical impact will depend on whether a service meets the taxable criteria, whether the supplier or the customer fulfills the registration and filing obligations, and how the e‑invoicing rules are eventually clarified.