What is Value Added Tax (VAT)?

VAT (Value Added Tax) is a type of consumption tax that is applied to goods and services. It's typically charged as a percentage of the price of goods or services and is ultimately paid by the customer, in this case, you.

Different countries have varying VAT rates, and some goods or services might be exempt or have reduced rates depending on local regulations.

How Is The VAT Charged?

At Flutterwave, Value Added Tax (VAT) is charged on transaction fees for local & international transactions, and transfers (payouts).  

Does Flutterwave charge VAT in my country?

Yes. As a merchant, transaction fees are charged when we process payments for you, the VAT will be added to the transaction fee, and Flutterwave will remit that VAT to the tax authorities.

Should I be charged for VAT? 

Yes. As a merchant, transaction fees are charged when we process payments for you, the VAT will be added to the transaction fee, and Flutterwave will remit that VAT to the tax authorities.

How much is VAT charged in my country? 

This table shows a breakdown of the Value Added Tax (VAT) that is charged per country. You can learn more about VAT and other applicable taxes in this guide.

How is VAT calculated?

In Nigeria, VAT is currently charged at 7.5%. This means that 7.5% of all Flutterwave fees, including transaction fees, transfer fees, and international processing fees are remitted to the tax body as Value Added Tax (VAT). 

Here's an example: 

Let’s assume your customer completes a ₦10,000 transaction. With a 2.0% transaction fee (₦200), the applicable VAT will be N15, 7.5% of the fee (₦200). 

Today, if you pass on the transaction fee to your customers, you get settled ₦10,000 into your account; if you pay the transaction fee, ₦9,800 (N10,000 - N200) is settled into your account. 

With VAT (₦15), the amount settled to you is reduced by N15. The N15 collected in VAT is directly remitted to the tax authorities.

Who bears the cost?

By default, you (the merchant) are charged VAT. Unlike transaction fees, VAT cannot be passed to your customers.

Will I still be able to pass other fees to my customers?

Yes, you still have the option to pass on transaction fees and international processing fees. To do this, log in to your dashboard and follow the steps below:

• Navigate to Settings 

• Click on Business preference 

• Go to Fee settings.

• Enable "charge my customers."  

How will I know when VAT has been charged? Will I see the Value Added Tax in my transaction report?

Value Added Tax will be displayed on all transactions on your dashboard. You can find the VAT information in your transaction reports which can be downloaded from your dashboard. To download your transaction statement:

• Log in to your dashboard 

• Navigate to Transactions.

• Click on the download button to download your transaction statement.

Will I be charged VAT when I make a transfer (payout) from my Flutterwave account?

Yes, Flutterwave charges Value Added Tax (VAT) on the fees associated with your payout transactions. As the merchant, you are responsible for this VAT, which is calculated on the payout fee. 

Think of it this way:

• Amount to be transferred: The main amount you're sending (₦1,000 in our example).

• Flutterwave's Fee: The charge for using their service (₦10 in our example). VAT is calculated on this fee.

So, when you make a payout, you'll likely see:

• Amount to be transferred: ₦1,000

• Payout Fee: ₦10

• VAT (on the fee): ₦0.75  (7.5% of ₦10)

• Total amount deducted from your Flutterwave Balance: ₦1,010.75

How will I know when VAT has been charged on my transfer? Will I see the Value Added Tax in my transfer report?

Yes, you can easily see the VAT charged on your transfer within your Flutterwave dashboard and in your transfer reports. Here's how to find this information:

1. Log in to your Flutterwave Dashboard.

2. Navigate to the Payment section on your dashboard.

3. Click on Transfers, and select the specific transfer you want to view.

4. You will find a detailed breakdown of the transaction, including the payout fee and the separate VAT amount applied to that fee.

Is VAT charged on all types of payouts from my Flutterwave account?

VAT is currently applied to the fees associated with payouts to bank accounts from your Flutterwave account. You, as the merchant, are responsible for this VAT, which will be calculated on the payout fee.

For other types of transfers, such as Currency Balance transfers, Mobile Money (MOMO) payouts, and transfers to other Flutterwave accounts, VAT is currently not applied to the transfer fees.