VAT (Modification) Order of 2021 which was signed in September 2021 was issued by The Minister of Finance, Budget, and National Planning in October with a commencement date of 30th July 2021. The Order modifies and expands the list of exempted goods and services in the First Schedule to the Value Added Tax (VAT) Act and provides clarification on the exempted items already listed in the Value Added Tax (VAT) Act.

Key Changes

Some of the key changes to the 2021 Order are highlighted below:

First Schedule of VAT (Part 1) – modifications to the exempt items in the first schedule includes:

  • Petroleum products
  • Renewable energy equipment
  • Raw Materials used in the production of baby diapers and sanitary towels.
  • Raw materials are used in the production of pharmaceutical products.
  • Locally produced animal feed.
  • Military hardware, arms, ammunition, 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 Company (NBET), and Electricity transmitted by Transmission Company of Nigeria (TCN) to Electricity Distribution Companies (DISCO’s).
  • Agricultural seeds and seedlings

First Schedule of VAT (Part II) – 

  • Part II of the First Schedule was amended by replacing Community and People’s Banks which whose services were exempted from VAT with services rendered by Unit Microfinance Banks. 
  • Shared passenger road-Transport services are exempted from VAT.

First Schedule of VAT (Part III)

  • Non-oil exports have been deleted from the schedule of zero-rated goods and services and have been reclassified to exempted services.


Some notable interpretations based on the modifications are highlighted below:

– “Commercial aircraft, commercial aircraft engines, commercial aircraft spare parts” which is listed as VAT exempt in the VAT Act has been defined to mean:

in the case of a commercial aircraft, an aircraft used in shared air transportation in Nigeria excluding private aircraft; and

in the case of commercial engines and commercial aircraft spare parts, engine, and spare parts for use on commercial aircraft.

– A “Unit Micro-Finance Bank” has been defined to mean a “micro-finance bank categorized by the CBN as Tier 1 or Tier 2 Unit Micro-Finance Bank.

– “Airline Transportation Tickets” which is also listed as VAT exempt in the VAT Act has been defined to exclude hired or rented aircraft or private jets which will be subject to VAT.

– “Fertilizer” which is also listed as VAT exempt in the VAT Act was streamlined to mean “all Fertilizers for Agricultural purpose”.

– Petroleum products, which are listed as VAT exempt in the 2021 Order, have been defined to mean aviation turbine kerosene, premium motor spirit, household kerosene, and locally produced liquefied petroleum gas and crude petroleum oils.

– Medical services have been restricted to healthcare-related services for both humans and animals rendered by a qualified medical practitioner. However, it excludes cosmetology, spa, gymnasium, and similar services.

– The definition of “lease of residential accommodation” which previously excluded leases by corporate persons from VAT exemption has been deleted.

– Previously exempted items such as Natural Gas, imported liquefied petroleum gases, and other gaseous hydrocarbons have been excluded from the Order.

-Share passenger road-transport service means road-transport service available for use by the public and excludes leased, hired, or rented motor vehicles for business or private use or car or ride-hailing 

Here at Taxaide, we view the VAT Modification Order 2021 as a welcomed development as it seeks to provide clarity on the interpretation of the VAT Act. For more enquiries, please contact: Amina Aviomoh (, +234 706 919 1245), Emmanuel Emereuwa (, +234 806 807 1347).

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