Can I claim input VAT on all business expenses?

Under the Nigeria Tax Act 2025 (effective January 2026), the rules for claiming input VAT have been revolutionized. Nigeria has moved from a "restrictive" model to a "Global Best Practice" model, which is fantastic news for your business cash flow.

The short answer is: Yes, you can now claim input VAT on almost all business expenses, including services and fixed assets, as long as they are directly linked to your taxable sales.

1. What has changed in 2026?

Previously, Nigeria only allowed you to claim VAT on "stock-in-trade" (raw materials or goods for resale). You couldn't claim VAT on the cost of your office rent, a new delivery van, or legal fees.

• New Rule: You can now recover VAT on Services and Capital Expenditure (Fixed Assets).
• The "Direct Link" Rule: The expense must be "wholly, reasonably, and exclusively" incurred for the production of your taxable goods or services.

2. What You CAN Claim (Recoverable Input VAT)

• Fixed Assets: If you buy a warehouse, a generator, or a delivery truck for your supply business, you can claim the 7.5% VAT back.
• Professional Services: VAT paid to your lawyers, accountants, or marketing consultants is now recoverable.
• Utilities & Overheads: VAT on office security, internet subscriptions, and repairs is now claimable (provided they aren't personal).
• Raw Materials/Goods: As before, any VAT paid to buy the goods you intend to supply is recoverable.

3. What You CANNOT Claim (Non-Recoverable)

There are still a few "no-go" areas to prevent abuse:

• Personal/Private Expenses: You cannot claim VAT on your personal grocery shopping or your family's home electricity bill, even if you are the business owner.
• Exempt Goods/Services: If you sell items that are VAT-exempt (like basic food or books), you cannot claim input VAT on the costs of producing them. Instead, you "expense" that VAT in your profit and loss account.
• Supplies with no E-Invoice: If your supplier gives you a manual or "fake" invoice that isn't validated on the NRS portal, you cannot claim that input VAT. The system will only recognize tax that was properly "fiscalized."

4. How the "Refund" Works in 2026

The 2025 Act introduced a much faster 90-day refund cycle (and 30 days for some VAT categories).

1. Offset: First, you subtract your Input VAT from the Output VAT you collected.
2. Credit: If your Input VAT is higher than what you collected (e.g., you bought a ₦100m truck but only made ₦50m in sales), the balance stays in your NRS "wallet."
3. Refund: You can apply for a cash refund or use the credit to pay other taxes (like Withholding Tax or Development Levy).

Summary Table for 2026