Can I deregister for VAT?

Yes, you can deregister for VAT in Nigeria, but the process and the implications have changed under the Nigeria Tax Act 2025.

In 2026, the threshold for mandatory VAT registration is ₦100 million. If your business was previously registered but your circumstances have changed, here is how you step out of the VAT net.

1. Who Can Deregister?

You are eligible to apply for deregistration if:

• Turnover Drop: Your annual gross turnover has fallen below the ₦100 million threshold and is expected to stay below it for the foreseeable future.
• Business Cessation: You are permanently closing down the business.
• Change in Activities: Your business has pivoted entirely to selling VAT-exempt goods (e.g., you stopped selling electronics and now only sell basic food items).
• Non-Resident Threshold: For foreign digital providers, if you haven't crossed the $25,000 threshold for three consecutive years.

2. The Deregistration Process (2026)

The Nigeria Revenue Service (NRS) requires a formal exit process to ensure no tax is left unpaid:

1. Notice to the NRS: You must notify the NRS via the TaxPro Max portal within 30 days of the event that makes you eligible for deregistration (e.g., the end of a financial year where turnover was ₦30m).
2. Final VAT Return: You must file a "Final Return" and pay any outstanding VAT collected up to the date of your application.
3. Audit/Review: The NRS may conduct a "Desk Review" or a physical audit to verify that your turnover has indeed dropped or that your business is closing.
4. Certificate of Deregistration: Once cleared, the NRS will update your tax profile, and you will no longer be required to file monthly VAT returns.

3. The "Stock & Assets" Catch

This is the part many business owners miss. When you deregister:

• VAT on Remaining Stock: If you have goods in your warehouse that you bought and claimed "Input VAT" on, you may be required to pay back that VAT to the NRS because those goods will now be sold without VAT.
• Assets: If you claimed VAT on business machinery or vehicles, a portion of that tax might be "clawed back" by the tax office upon deregistration.

4. Should You Actually Deregister?

Before you exit, consider these 2026 realities:

• Input VAT Loss: Once deregistered, you can no longer claim back the 7.5% VAT you pay to your own suppliers. It becomes a permanent cost to your business.
• B2B Credibility: Large corporate clients (who are VAT-registered) often prefer dealing with other VAT-registered businesses so they can claim their tax credits. Deregistering might make you "less attractive" to big contracts.

Summary: Exempt vs. Deregistered

If your turnover is simply below ₦100m, you are exempt from charging VAT, but you might still stay registered in the system with an active TIN. Deregistering is the final step of "unlinking" your business from the VAT filing module entirely.