Nigeria: Tribunal holds commercial rent is subject to VAT; conflicting opinion

Nigeria: Commercial rent is subject to VAT

The Tax Appeal Tribunal (sitting in Benin) issued a judgment on 9 September 2020 holding that rental income derived from the lease of commercial properties is liable to value added tax (VAT) to the extent that it is not exempted from the first schedule to Nigeria’s VAT law.


The case is: Chief J.W. Ellah, Sons & Co. Ltd. v. Federal Inland Revenue Service

KPMG observation

This decision directly conflicts with one from the appellate tribunal (Lagos) delivered on 10 September 2020, when that tribunal held that rental income derived from lease of real estate properties, whether for residential or commercial purpose, is not subject to VAT. Read TaxNewsFlash

VAT on commercial rent and rationale for the decision

The taxpayer was involved in the business of maintaining and leasing of real estate properties to commercial and residential customers. The tax authority allegedly revised an assessment and assessed VAT on commercial lettings of the subject premises.

The tribunal looked to section 2 of VAT Act 2004, which provides that VAT “shall be charged and payable on the supply of all goods and services [referred to as “taxable goods and services”] other than those goods and services listed in the First Schedule to this Act” and held that:

  • All goods or services that are not expressly exempted as listed in the first schedule are VAT-able.
  • The building is was not listed as one of the exemptions in the payment of VAT.

Read an October 2020 report prepared by the KPMG member firm in Nigeria

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