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The Value added Tax Act 1993 provides for the payment of tax by non-resident foreign companies that carry on business in Nigeria by insisting that such companies register with the board for the purposes of tax, using the address of the person it has a subsisting contract as its addresses for the purpose of correspondence relating to tax- section 10 (1). By Section 10(2) it was mandated to include the tax in its invoice and the person to whom the goods or services was supplied to in Nigeria was to remit the tax in the currency of the transaction

The wordings of this provision has been frequently  contested  between companies that receive supply of goods and services in Nigeria  from non-resident foreign companies and the Federal Inland Revenue services “FIRS” as to the “vatability” of such services rendered by non-resident companies to companies/individuals resident in Nigeria.

 In the Case of Vodacom v. Federal Inland Revenue Services Suit Nos: CA/l/556/2018 FIRS after carrying out a tax investigation on Vodacom issued on it an additional tax assessment for the payment of Value added tax (VAT) in respect of its transaction with a non-resident foreign company for the supply of satellite bandwidths to Vodacom. Vodacom objected to the assessment and as the issue was not resolved by parties, they appealed to the Tax Appeal Tribunal. Both the Tax Appeal Tribunal and the Federal High Court dismissed Vodacom’s appeal and ordered them to pay the tax assessed.

Vodacom’s Arguments

Vodacom argued that the transaction for the supply of satellite bandwidths with the foreign company was not a “vatable” transaction. They relied on Section 2,10 and 46 of the VAT Act, stating that a service provided by a non-resident company to a resident person in Nigeria is only “vatable” if the services was physically carried out in Nigeria.  They argued that when the service is rendered outside Nigeria but received in Nigeria, it is not “vatable”, as location is key to “vatability” of any transaction for supply of services from a person not resident in Nigeria to a resident Nigerian.

FIRS’ Arguments

FIRS relying on Section 2, 7 and 10 of the VAT Act, argued that section 2 of the Act makes all services rendered in Nigeria “vatable” except services listed in the 1st Schedule of the act. And that the transaction between the Non-resident foreign company and Vodacom does not fall under those exceptions

Court’s Decision

The Court held that the services rendered by the foreign company to Vodacom are “vatable”. It held that the non-resident company contracted it tax liability to the Vodacom and it was Vodacom’s obligation to pay tax as the duty imposed under Section 10 of the Act on both parties is not conjunctive and the failure of the non-resident company to include it in their invoice does not absolve Vodacom from remitting tax.

Legislative Adoption

The Finance Act 2019 in Section 33, Part IV amended the Value Added Tax. Section 2 was substituted to provide; tax shall be charged and payable on supply of all goods and services in Nigeria other than those listed in the first schedule of the Act.

 It went further to clarify when goods and services are said to have been supplied in Nigeria; (i) the services were rendered in Nigeria by a person physically present in Nigeria at the time of the service provision or ( ii ) the services are provided to a person in Nigeria, regardless of the services are rendered within or outside Nigeria.(emphasis ours)

Section 36 of the Finance Act substitutes section 10 of VAT Act and adds a new section 10 (3) which provides that the non-resident company shall include the tax on its invoice for the supply of taxable services.  Section 10 (4) further provides that the person on whom the services are supplied in Nigeria shall withhold and remit the tax directly to the service in the currency of payment.


The Nigerian legislation has codified, through the Finance Act of 2019, the legal stance of “vatability” of services rendered by non-resident foreign companies in Nigeria. By this new provision, the Nigerian receiver of foreign goods and services is mandated to remit same to the FIRS.

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