Your Business Location Is Not Necessarily Where Your VAT Counts

This means that, for the purpose of attributing VAT revenue, the location where taxable goods and services are consumed can now matter, even when the VAT return is filed somewhere else.

The change is contained in the Nigeria Tax Administration Act, 2025 (NTAA) and has implications for how businesses record and report their taxable transactions. In the Section 22 of the NTAA deals with VAT returns. It requires taxable persons to submit VAT returns to the Service, with the return generally due on or before the 21st day of the following month. The section also contains a specific provision on attribution.

Section 22(11) provides that, “for the purpose of attribution,” a VAT return must provide details of the consumption of taxable supplies, irrespective of where the return is filed.

That wording is important.

The law is distinguishing between where the return is filed and where the taxable supply is consumed.

For example, a company may operate from Lagos and file its VAT return through the relevant tax authority, while making taxable supplies to customers across several states. The filing location does not, by itself, tell the full story of where those supplies are consumed.

The new reporting requirement is designed to capture that additional information.

So why does the location of consumption matter?

The answer is found in the VAT distribution formula under Section 81 of the NTAA.

The Act provides that VAT revenue is distributed among the Federal Government, State Governments and the Federal Capital Territory, and Local Governments. Of the VAT revenue standing to the credit of states and local governments, 50% is distributed equally, 20% based on population and 30% based on consumption.

For this purpose, the Act expressly states that consumption is determined by the place of consumption, irrespective of where the return is filed.

This changes the significance of transaction-level information.

If VAT revenue is partly distributed according to consumption, the system needs information that can show where taxable consumption takes place. Simply looking at the location from which businesses file their returns would not provide that picture.

A company headquartered in Lagos, for instance, may have customers in Abuja, Kano, Enugu and Rivers. If all of its VAT activity were attributed simply to the location of its filing, the resulting picture would not necessarily reflect where its taxable supplies were actually consumed.

The new framework seeks to account for that distinction.

For businesses making taxable supplies, location information is becoming more relevant to VAT records.

The law itself does not, in Section 22(11), provide a detailed list of every piece of information a business must collect to establish consumption. It simply requires VAT returns to provide details of the consumption of taxable supplies for attribution. The practical reporting requirements therefore depend partly on the procedures and systems deployed by the tax authority.

This is an important distinction because businesses should not assume that every possible customer-location detail is already prescribed by the Act.

However, businesses can reasonably begin reviewing their existing records to determine whether they can identify where their taxable supplies are consumed.

That could become particularly relevant for businesses with customers, branches, delivery locations or service recipients spread across different parts of the country.

The change also sits alongside electronic VAT reporting

The consumption requirement is not an isolated development.

Section 23 of the NTAA provides for a Value Added Tax fiscalisation system. Where the Service deploys an Electronic Fiscal System, persons making taxable supplies are required to use the system for recording and reporting supplies, while taxable persons are responsible for maintaining accurate records of transactions passing through it.

The broader direction is therefore clear: VAT administration is moving towards more structured transaction reporting and greater use of information generated from business transactions.

This makes the quality of a business’s underlying records increasingly important.

A business should not only know how much it sold. It may also need to be able to establish what it sold, to whom, and where the taxable supply was consumed, depending on the applicable reporting requirements.

Is this already fully operational?

This is where businesses need to exercise some caution.

The legal requirement is already contained in the NTAA. However, the practical implementation of consumption-based VAT attribution requires reporting procedures and systems that translate the statutory requirement into the information businesses actually submit.

Forvis Mazars noted in its 2026 tax reform guidance that businesses should monitor Nigeria Revenue Service communications for updated filing procedures and that VAT reporting templates may need to reflect the new attribution requirement.

So businesses should not invent their own reporting rules simply because the Act refers to consumption.

Instead, they should understand the legal requirement, maintain reliable transaction records and pay attention to the reporting procedures issued by the Nigeria Revenue Service.

What should businesses be doing now?

The safest approach is to make transaction records more useful before the reporting requirement becomes a problem.

Businesses that make taxable supplies should consider whether their accounting, invoicing and sales records can clearly establish:

the taxable supply made;
the value of the transaction;
the customer or recipient;
the relevant transaction date;
and the location relevant to the consumption of the supply.

The exact information required will depend on the applicable rules and reporting mechanism. The point is not to create unnecessary paperwork. It is to ensure that the business can support the information it reports.

This is particularly relevant for businesses that sell across multiple states. A sales record that simply says “₦5 million sales” may be useful for calculating turnover, but it tells a much smaller story than a properly organised record showing the underlying transactions and their relevant locations.

Nigeria’s VAT reforms are moving beyond the simple question of how much VAT was collected.

The new framework also considers how VAT revenue should be attributed and distributed, with consumption now accounting for 30% of the allocation of VAT revenue standing to the states and local governments.

That makes information about consumption more significant.

For businesses, the practical lesson is straightforward: your registered business address and your VAT filing location may not tell the whole story of your taxable activity.

As the new VAT reporting framework develops, businesses that already maintain accurate, well-organised transaction records will be in a much stronger position to meet whatever reporting requirements are prescribed.

The shift is not simply about collecting more information.

It is about making VAT attribution reflect where taxable economic activity is actually consumed, rather than relying solely on where a return happens to be filed.

LessaTax helps businesses organise the financial records behind their tax obligations, so important transaction details do not become a scramble when reporting time arrives.

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