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Top 2 Ways to Easily Calculate VAT for SMEs in Nigeria!

Hillary Marcel 0

Calculating VAT (Value Added Tax) is essential for SMEs (Small and Medium Enterprises) in Nigeria. This guide will show you how to calculate VAT for your business, ensuring you stay compliant with tax laws. We’ll also explain the difference between VAT inclusive and VAT exclusive prices.


What is VAT?

VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. In Nigeria, the standard VAT rate is 7.5%.

Why Calculate VAT?

Calculating VAT correctly is important for:

  • Compliance with tax laws
  • Accurate pricing of products and services
  • Proper financial records

How to Calculate VAT for SMEs

VAT Inclusive and VAT Exclusive Prices



VAT Exclusive: The price does not include VAT. You need to add VAT to this price.

VAT Inclusive: The price includes VAT. You need to extract VAT from this price.

Calculating VAT Exclusive

To calculate the VAT exclusive price, follow these steps:

  1. Determine the VAT rate (7.5% in Nigeria).
  2. Multiply the original price by the VAT rate.
  3. Add the VAT to the original price.

VAT = Original Price × VAT Rate
VAT Exclusive Price = Original Price + VAT

If the original price of a product is ₦10,000:
VAT = ₦10,000 × 0.075 = ₦750
VAT Exclusive Price = ₦10,000 + ₦750 = ₦10,750

Calculating VAT Inclusive

To calculate the VAT from a VAT inclusive price, follow these steps:

  1. Determine the VAT rate (7.5% in Nigeria).
  2. Divide the VAT inclusive price by 1 + VAT rate.
  3. Subtract the result from the VAT inclusive price to get the VAT amount.

VAT = VAT Inclusive Price × (VAT Rate / (1 + VAT Rate))
VAT Exclusive Price = VAT Inclusive Price – VAT

If the VAT inclusive price is ₦10,750:
VAT = ₦10,750 × (0.075 / (1 + 0.075)) = ₦750
VAT Exclusive Price = ₦10,750 – ₦750 = ₦10,000

Software to Calculate VAT

Manually calculating VAT can be tedious and prone to errors. Using software can simplify this process.

Tracepos helps you calculate VAT or any type of associated tax, so you don’t have to do it manually. With Tracepos, you can easily know how much tax to remit to the FIRS (Federal Inland Revenue Service).

Don’t waste time with manual VAT calculations. Let Tracepos handle it for you! With Tracepos, you can easily calculate VAT, manage your taxes, and ensure accurate financial records for your business.

Sign up now and simplify your tax calculations. Join thousands of SMEs in Nigeria who trust Tracepos to manage their VAT and other tax obligations effortlessly.

Get Started with Tracepos

Take control of your tax calculations and focus on what matters most – growing your business!

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