VAT on medical services and medicines in Nigeria
Whether a Nigerian clinic charges VAT on consultations and medicines under the Nigeria Tax Act, and which tax code each invoice line should carry.
By Achekam · · 5 min read · For Healthcare businesses in Nigeria
A clinic in Ibadan bills a consultation, a malaria test, a course of antimalarials and, on the way out, a bottle of sunscreen and a branded water bottle from the reception shelf. Five lines on one invoice. Under Nigerian VAT they do not all carry the same treatment, and the clinic's invoice needs to show which is which.
The Nigeria Tax Act changed the VAT landscape from 1 January 2026, and healthcare is one of the areas it treats specially. This article explains what the Act zero-rates for healthcare, how a clinic puts zero-rated, exempt and standard lines on the same invoice in Achekam, which items deserve a second look, and why Achekam may refuse a standard-rated line at the time of writing.
What the Nigeria Tax Act zero-rates for healthcare
Nigeria zero-rates basic food, medical and pharmaceutical products, educational books and materials, medical services, tuition from nursery to tertiary level and exported goods other than oil and gas, among other items. That is section 187 of the Nigeria Tax Act 2025 in its gazetted text.
For a clinic, the two items that matter are medical services and medical and pharmaceutical products. Consultations, procedures and the medicines a clinic supplies fall to be considered under those headings.
Nigeria's standard VAT rate is 7.5%, unchanged when the Nigeria Tax Act took effect on 1 January 2026. Anything a clinic sells that is not zero-rated or exempt is standard-rated at that rate, if the clinic is registered and charging VAT at all.
The Nigeria Revenue Service's VAT page sets out who must register for and charge VAT, the monthly return, the exemption that lets small companies skip filing and paying VAT, what a VAT invoice must show, zero-rated and exempt examples and input VAT recovery. Read it alongside your adviser's view of your own services.
First question: does the clinic charge VAT at all?
A small business in Nigeria is exempt from registering for, charging and filing VAT, though it may opt in. The old ₦25 million VAT threshold is obsolete. The turnover limit for the exemption is itself contested at the time of writing: ₦50 million in the gazetted text of the Act and ₦100 million in another official copy of it.
So a small clinic may not need to charge VAT on anything, while a larger one does. Settle that with your adviser before worrying about individual lines. Related questions are covered in the small-business VAT exemption in Nigeria.
Zero-rated, exempt and standard lines on one invoice
In Achekam, a Nigerian business picks a tax code on each invoice line: standard, zero-rated, exempt, out of scope or reverse charge. Only standard lines carry VAT, at the approved rate for Nigeria. This applies once the Nigeria country pack is activated under Settings, Jurisdiction & regulators.
Two practical points:
- Use the right form. Create invoices from the invoice form under Accounting. The New invoice form under Billing & Finance offers only 15% or 0% VAT and shows rand, so it does not follow Nigerian VAT.
- Your VAT number. If the clinic is registered, enter its number in Settings under Firm Profile; documents made by the server print it and are titled Tax Invoice only when a VAT number is set.
A worked example in words: the Ibadan clinic's invoice has five lines. The consultation and the malaria test go in as zero-rated medical services. The antimalarials go in as zero-rated pharmaceutical products. The sunscreen and the water bottle are the lines to check with the adviser; if they are standard-rated, they carry VAT at the approved rate, and the invoice shows VAT only on those two lines.
Items a clinic sells that may not count as medical
Clinics often sell more than medicine. Before you set codes, list everything that goes through your invoices and till, and ask your adviser about anything at the edges, for example:
- Cosmetic or aesthetic treatments that are not medically indicated.
- Skincare, toiletries and beauty products on a reception shelf.
- Vitamins and supplements sold as general wellness products.
- Branded merchandise.
- Reports, letters and forms prepared for employers or insurers.
None of these is classified here; the point is that "we are a clinic" does not settle the treatment of everything a clinic sells.
If you sell at a till as well, note one limit: a product marked Exempt in the Item Master is recorded at the till, and on the VAT return, as zero-rated, because the exempt or zero-rated choice is never saved on the product. Agree with your accountant how any exempt till items will be corrected.
Why Achekam may refuse a standard-rated line today
Every Nigerian tax figure in Achekam's rule book was loaded "under review", and Achekam computes nothing from a figure until an Achekam platform administrator approves it. Whether the Nigerian VAT rate has been approved by the time you read this is something to check in your own workspace.
While the Nigerian VAT rate rule awaits approval, Achekam refuses to charge standard-rate VAT on a Nigerian workspace's invoice, and tells the user to choose a tax code without VAT or wait. That follows a wider rule: Achekam takes the standard rate from the approved rule in force on the document's date and refuses rather than assumes a rate when no approved rule applies.
For a clinic, most lines are zero-rated anyway, so the refusal bites only on standard-rated items. Do not switch a standard-rated line to a zero-rated code just to get the invoice out; that understates the VAT you owe. Keep the invoice as a draft, issue the medical lines on their own if that suits the patient, and ask your accountant how to handle the standard-rated items until the rate is approved. More on this is in Nigerian and Kenyan VAT while rates await approval.
Setting tax codes: a checklist
- Confirm with your adviser whether the clinic must charge VAT at all.
- Activate the Nigeria country pack.
- List every service and product you bill, and agree a code for each.
- Invoice from the Accounting form, never the Billing & Finance form.
- Flag exempt till items for your accountant.
- Recheck the list whenever you add a new service or product line.
Education faces a similar zero-rating question for tuition; see VAT on tuition in Nigeria for how schools approach it.
Most of a clinic's income will be zero-rated, but "most" is not "all". Settle the clinic's VAT status first, code each line deliberately, and never use a zero-rated code to work around a refusal.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
