The Application of VAT on Loans in Nigeria: A Stitch in Tax, Saves Cash

• Section 2 of the VAT Act imposes tax on the supply of goods and services in Nigeria, except for those listed in the First Schedule.
• The Finance Act,2019 amended the definition of goods and services in the VAT Act.
• A loan is when you receive money in exchange for future repayment of the principal and interest.
• The FIRS has provided guidelines on what financial services are subject to VAT.
• Charges such as commissions, fees, and transactions are subject to VAT.
• Income of financial institutions that are not liable to VAT includes interest on loans and advances, savings accounts, bank deposits, and interbank placements.

Source: africataxreview.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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