VAT is filed every month, which means a late-filing penalty has twelve chances a year to apply, not one. That is worth remembering before treating one missed deadline as a small matter.
The deadline the penalty is measured against
Every monthly return is due by the 21st day of the following month. Miss it by even a day, and the return counts as late from that point. There is no grace period built into the rule itself, so treating the deadline as approximate rather than firm is a costly assumption to carry into a new month.
The cost of a late return
The first month costs ₦100,000, under section 101 of the Nigeria Tax Administration Act 2025. Every month the return stays outstanding after that adds ₦50,000.
Due even if no business took place, so this applies even to a return that would have shown nothing due.
A separate cost: paying the VAT itself late
Filing late and paying late are not the same failure. Tax paid after the deadline attracts its own 10% penalty, calculated on the amount owed.
A business can therefore face both penalties on the same return: one for filing late, another for paying late. Clearing one does not automatically clear the other.
Interest on top of both
Beyond the two penalties, unpaid VAT also attracts interest, currently the CBN Monetary Policy Rate plus 1 percentage point, charged daily until the amount is settled. This rate is reviewed from time to time under a separate government order, so treat it as a moving figure rather than a fixed one.
A worked example
Here is a made-up example. A business misses its VAT return for January, February and March, and finally files in April.
January is one month late: ₦100,000. February and March each add ₦50,000. That return alone now owes ₦100,000 plus two lots of ₦50,000, before any VAT itself or interest is added.
Three separate late months, each with its own filing penalty, is how a small oversight becomes an expensive one.
Why VAT penalties stack faster than annual ones
A company income tax return is late once a year at most. A VAT return can be late twelve separate times, each one triggering its own first-month or further-month charge.
That is worth factoring into how strictly you treat the twenty-first of each month. A business that would shrug off one annual penalty often cannot afford twelve smaller ones stacked across a year. The compliance deadline calendar tracks the date for you, and our guide to nil returns covers the version of this mistake that catches out quiet months specifically. For the filing process itself, see the VAT monthly return guide, or start a VAT filing once you are ready.