Nigeria Issues VAT (Modification) Order, 2021 – to Modify the List of VAT Exempt Items

Effective 30 July 2021, a new Value Added Tax (VAT) Modification Order (2021) has been issued by Nigeria’s Minister for Finance, Budget, and National Planning, to revoke and supersede any other VAT Modification Order that had been issued prior 30 July 2021 (Recall that in 2020, a Ministerial VAT (Modification) Order, 2020 was also issued).

This document, among other things:

  1. Specifically modifies (changes or adds to) the provisions of parts 1, 2 and 3 of the first schedule to the VAT Act. The first schedule to the VAT Act shows the list of goods and services that are exempt from VAT in Nigeria, and those that are VATable at Zero rate, instead of 7.5%.
  2. Provides a detailed breakdown or sub-list of exempt items, with their associated Common External Tariff (CET) codes, to specify in detail, what constitutes the headline items listed as exempt under the First Schedule to the VAT Act.
  3. Revokes all other VAT (Modification) Orders issued prior 30 July 2021.
  4. Provides detailed interpretations or definitions of terms in the list of exempt items.

Highlights of the VAT (Modification) Order, 2021

The following are highlights of the changes introduced by the VAT (Modification) Order, 2021, many of which now specifically clarifies several grey areas from the 2020 VAT Modification Order:

  1. ‘Books’ (which was hitherto listed as a VAT exempt item under Part 1 of the first schedule) has now been replaced by the term, ‘Educational Books’. Its interpretation referring to only books supplied by schools, established educational and religious institutions.
  2. ‘Fertilizer, locally produced agricultural and veterinary medicine, farming machinery and farming transportation equipment’ which were formerly exempted under paragraph 5 of part 1, have now been replaced by:
  • Fertilizers, and 
  • Locally produced agricultural chemicals and locally produced veterinary medicine

* This new provision now includes ‘agricultural chemicals’ as part of exempt goods, but seems to have inadvertently (or purposefully) excluded- ‘farming machinery and farming transportation equipment’ as part of exempt items, although the interpretation for ‘farming machinery and farming transportation equipment’ is still retained in the ‘Interpretations Section” of this new Order.

3. The following items have also now been specifically listed as goods exempt from VAT under the first schedule to the VAT Act:

  • Petroleum products (defined as aviation turbine kerosene, premium motor spirit, household kerosene, locally produced liquified petroleum gas and crude petroleum oils)
  • Renewable energy equipment
  • Raw materials for the production of baby diapers and sanitary towels
  • Raw materials for the production of pharmaceutical products
  • Locally produced animal feeds
  • Military hardware, arms, ammunitions, and locally manufactured uniforms used by the Armed forces, para-military and other security agencies of governments in Nigeria.
  • Gas supplied by gas producing companies to Electricity Generating Companies (GENCOs), Electricity generated by GENCOs and supplied to National Grid or Nigeria Bulk Electricity Trading Company (NBET) and Electricity transmitted by Transmission Company of Nigeria (TCN) to Electricity Distribution Companies (DISCOs). This means that electricity distributed / sold to final household and industrial consumers are not specifically exempt from VAT.
  • Agricultural seeds and seedlings

4. Under Part 2 (exempt services), the general exemption previously granted to services of microfinance banks, has now been restricted only to services of tier 1 and tier 2 microfinance banks (meaning that services of micro finance banks holding State and National licenses, respectively, are no longer VAT exempt).

5. ‘Shared passenger road-transport service’ (‘public transportation’ in a lay man’s language) has also now been specifically listed as VAT exempt. According to the ‘Interpretations’, this service does not include leased, hired, or rented vehicles or transportation apparatus for business or private use, or a car or ride hailing.

6. Under part 3 (zero-rated goods and services), item number 1 – ‘non-oil exports’, has now been deleted to clear the long existing duplication between this provision and the provisions for ‘all exports/ all exported services’ respectively, in parts 1 and 2 of the first schedule.

To learn more about VAT, holistically (as amended up to Finance Act 2020) and how it may apply to your kind of business – in simple, everyday language, you may purchase our ebook themed ‘Value Added Tax Explained, available on

To have access to the rapidly changing tax laws/ Regulations in a specially curated, handy, mobile format, you may also want to download Vi-M’s ‘Tax Law Book App from either Google Play or App Store, then purchase the in-app purchase (tax and related laws).

For a copy of the VAT (Modification) Order, 2021, please send an email to