Nigeria: VAT applies, satellite-network bandwidth | KPMG | GLOBAL

Nigeria: VAT applies, satellite-network bandwidth provided by non-resident Dutch company

Nigeria: VAT applies, satellite-network bandwidth

The Tax Appeal Tribunal (Lagos) held that value added tax (VAT) applies to satellite-network bandwidth capacities provided to the Nigerian taxpayer from outside Nigeria by a Netherlands-based non-resident company. The tribunal concluded that bandwidth capacities were not specifically exempted from VAT under the Nigerian VAT law.


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Under Nigeria’s VAT law, VAT is chargeable on the supply of goods and services unless specifically exempted from VAT by a statutory provision. A provision requires a non-resident company conducting business in Nigeria to register with the Federal Inland Revenue Service, using the address of its Nigerian customer as its address.

In this situation, the Nigerian taxpayer was supplied with satellite-network
bandwidth capacities, from outside Nigeria, by a Netherlands-based non-resident company. The Dutch company did not charge VAT on its invoices to the Nigerian taxpayer for the bandwidth services provided.

The Nigerian tax authority assessed the Nigerian taxpayer for VAT on this
transaction. The taxpayer countered that the supply of bandwidth was a service provided outside Nigeria and that VAT did not apply to this supply.

The tribunal, however, concluded that because bandwidth capacities are not exempted under a schedule of the VAT law, the services were subject to VAT in Nigeria—even though the Dutch company did not have a presence in Nigeria.  In this case, it was the Nigerian taxpayer that was being taxed and that has an obligation to pay the VAT due on the transaction. The taxpayer was responsible for making sure that the Dutch company had registered for VAT purposes in Nigeria and issued correct invoices showing VAT was being charged.


Read a March 2016 report [PDF 948 KB] prepared by the KPMG member firm in Nigeria: Applicability of VAT to services provided outside Nigeria by a non-resident company

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