Presidential Fiscal Policy and Tax Reforms Committee Given Six-Week Mandate to Develop 2026 VAT Modification Order

ABUJA, Nigeria — 11 August 2026 — The Federal Government has commenced a comprehensive review of the categories of goods and services subject to Value Added Tax (VAT) exemptions and zero-rating under Nigeria’s emerging tax framework, as part of ongoing efforts to clarify the implementation of the country’s new tax laws.

The review is being undertaken by the Presidential Fiscal Policy and Tax Reforms Committee, chaired by Mr. Taiwo Oyedele, which has been given a six-week mandate to develop the proposed 2026 VAT Modification Order.

The initiative is expected to provide greater certainty on the VAT treatment applicable to specific goods and services and address longstanding questions surrounding the scope of exempt and zero-rated supplies.

Clarifying the VAT Framework

The proposed VAT Modification Order is expected to establish a clearer and more definitive framework for determining which goods and services qualify for VAT exemption or zero-rating.

Among its principal objectives are to:

According to the Committee, the review forms part of the broader implementation of the new tax legislation signed into law by President Bola Ahmed Tinubu and is intended to support a more predictable, transparent and business-oriented tax environment.

Exempt Supplies and Zero-Rated Supplies: Why the Distinction Matters

A key issue in the review is the need to maintain a clear distinction between VAT-exempt supplies and zero-rated supplies.

An exempt supply is generally outside the charge to VAT, meaning VAT is not imposed on the supply and the associated input VAT treatment is subject to the applicable rules.

A zero-rated supply, by contrast, is subject to VAT at a rate of 0%. This distinction can have significant implications for the supplier’s ability to recover or claim input VAT, subject to the applicable statutory requirements.

The practical consequences of this distinction make an authoritative and up-to-date classification of supplies particularly important for businesses operating across multiple sectors.

Sectors Likely to Watch the Review Closely

The review is expected to attract considerable interest from businesses and taxpayers operating in sectors that have traditionally benefited from VAT concessions or have been subject to questions concerning their tax treatment.

These include:

For businesses in these sectors, the final classification of supplies could have direct implications for pricing, input VAT recovery, cash-flow management, contractual arrangements and overall tax costs.

Addressing Compliance Uncertainty

The classification of goods and services for VAT purposes has historically generated practical difficulties for taxpayers, tax advisers and revenue authorities.

Uncertainty regarding whether a particular transaction is exempt, zero-rated or ordinarily taxable can affect the way businesses structure transactions, account for VAT and determine recoverable input tax.

A comprehensive Modification Order could therefore provide an important administrative reference point for taxpayers and tax authorities by establishing a more uniform basis for applying the relevant provisions of the tax legislation.

Six-Week Timeline

The Committee has been given six weeks to complete the review and submit its recommendations.

Following completion of the process and the requisite governmental approval, the proposed 2026 VAT Modification Order is expected to be formally issued and gazetted, at which point it would provide an authoritative framework for the administration of the relevant VAT provisions.

Stakeholders, including businesses, manufacturers, professional advisers, consumer groups and other affected parties, are expected to have an opportunity to make submissions as part of the review process.

Implications for Businesses

For businesses, the review is more than a technical exercise in tax classification.

The eventual VAT treatment of a product or service can affect:

Pricing: VAT treatment can influence the final price charged to customers.

Input VAT recovery: The distinction between exempt and zero-rated supplies can materially affect a business’s ability to recover input VAT.

Cash flow: Changes in VAT treatment may alter the timing and amount of VAT payable or recoverable.

Tax compliance: A clearer classification framework should reduce uncertainty and the risk of inconsistent treatment.

Investment decisions: Greater certainty regarding future tax liabilities can improve the reliability of financial modelling and investment planning.

Looking Ahead

The review represents another significant step in the Federal Government’s broader tax reform programme.

The immediate challenge will be to ensure that the final VAT Modification Order achieves an appropriate balance between revenue mobilisation, administrative simplicity, taxpayer certainty and economic competitiveness.

For businesses and tax professionals, close attention should therefore be paid to the outcome of the six-week review, particularly any changes affecting the classification of supplies, input VAT recovery and sector-specific VAT treatment.

Key Takeaway

The proposed 2026 VAT Modification Order could become an important reference point for determining the VAT treatment of goods and services under Nigeria’s evolving tax framework.

Businesses should avoid relying solely on historical VAT treatment and should instead monitor the outcome of the review and assess its implications for their pricing, contracts, accounting systems, tax compliance and investment decisions once the final framework is issued.