The purpose of this project is to determine to
identify strategies for administrative implementation of the variables amongst
others. Also to identify and appraise administration of VAT in Nigeria,
highlight the loopholes and suggest solution.
From the research carried out, the stuffy reveals
that Value Added Tax is an important element in the life of any nation and also
that the revenue generated by the government is not only beneficial to them as
so many Nigerians thinks but also to the people as it is been used for the
effective administration of the country. The research also reveals that the
payment of value added tax dues by so many people is always seen with hatred
and as much, the practice of tax evasion and avoidance have a negative effect
on tax generation.
Finally, the study reveals that if more revenue can
be generated through taxation, it will lead to an effective administration by
the government putting into consideration a true government who is ready to
serve the people.
Above all this research work recommends that in
order for an efficient and effective tax generation and administration, the
government should try to put in place provision of more staffs and good welfare
for them so as to perform their jobs effectively. It also recommends that a
good habit of administration should be inculcated by the government in order to
gear the citizens to pay tax.
TABLE OF CONTENT
Title page i
Table of contents vii
1.1 Introduction 1
of study 2
of study 3
of study 4
1.5 Scope of
of problem 5
of the study 7
2.1 Introduction 8
clarification of taxation 11
of effective administration of VAT 30
in revenue collection 30
3.0 Introduction 50
3.1.1 Types of
research method 51
of the study 51
collection instrument 51
of an instrument 51
3.5 Reliability of the Instrument 52
AND INTERPRETATION OF RESULT
4.1 Introduction 53
of model 56
4.4 Specification of Model 58
of the estimated models 66
CONCLUSION AND RECOMMENDATIONS
5.1 Summary 71
5.2 Findings 72
5.4 Conclusion 86
a country to exist in harmony, the government of such country must live up to
its public economic and social obligation by providing economic and social
amenities reduced or subsidized commercial rate.
do so, this will normally involve huge expenditure and therefore, will also
require revenue source.
government at various levels will need to settle operational costs to be able
to offer the aforementioned social amenities; one of the various sources of
fund available to any government for revenue is Taxation. This could either be
in form of direct or indirect tax or both.
(1998) described taxation as “the concept and the science of imposing tax on
(1986) described Revenue as referring to a monetary quality earning to a
monetary quality during a given time period regardless of the amount collected.
of the forms of indirect tax is Value Added Tax (VAT) hereafter referred to
introduction of VAT in Nigeria virtue of Decree No 102 of 1993 which took
effect from 1st January 1994 mark the phasing out of the Sales Tax
which has been in force since 1986 by virtue of the ales Decree No 7 of 1986.
was adopted in Nigeria because the federal as well as the state government need
additional resources for development. This revenue can only come from increase
in taxation and productive effort. The need of the government for more revenue
cannot e over-emphasized particularly as revenue from crude oil which is the
most important source of oil in the international market continues to
influence, making it necessary for government to explore pother source of
revenue available from oil and present non-oil sources mainly conventional and
traditional taxes were not sufficient to meet public needs, as expenditure
continue to rise in an era of increased socio and economic problems,
particularly the pressure from population.
1.2 OBJECTIVES OF STUDY
purpose of embarking on these research works are:
collect addition on the subject and develop a mechanism for improving on
existing level of knowledge and
identify strategies for administrative implementation of the variables amongst
and appraise administration of VAT in Nigeria, highlight the loopholes and
the effect of VAT on revenue generation of the country.
consolidate and modernize the tax system n order to provide a basis for strong
revenue growth and flexible fiscal management.
provide incentives for export production
distribute the burden of taxation more evenly across different goods and
services through a broader coverage, so as to avoid multiple taxation.
problems faced by VAT administrator and how they can be abated.
ways of making the operation and administration of VAT better than what it is
develop an approach to reduce the consumption of luxuries and curb the increase
in the consumption of non-essential. The approach by implication would tax
non-consumption goods relatively higher and minimize impact on essential goods
and services used by low income earners and formulate a program of work for the
accomplishment of the assignment.
1.3 RELEVANCE OF STUDY
principal reasons that prompted the introduction an implementation of VAT I
Nigeria are enumerated under the historical background of VAT in Nigeria. VAT
was set out to meet some targets, according to E.I. Ijewere, chairman Modified
VAT (MVAT) committee. VAT is a tax imposed on value, which the supplier or tax
seller of a goods or services adds to the public sectors.
addition, the information circular 9304 of the FIRS advanced some reasons
justifying the replacement of sales tax with the Value Added Tax rationales put
forward by FIRS are as follows:
is equipped to ensure voluntary compliance because of the multistage collection
and credit mechanism involved.
collection at the point of importation is easier under VAT than under sales tax
where the imported goods are levied at the point of retail after leaving the
has higher revenue yielding potential than the retail sales tax.
is inherently more comprehensive because it is better equipped to tax services
than the sales tax.
use of invoice under VAT provides self-police mechanism, as VAT payers demands
invoice so that they can make valid credit or refund claims
use of invoices creates a well-defined audit trail, which the tax authority can
is also easier to integrate VAT audit with some tax audit since VAT is comprehensive and restricted to the retail
stage as the sales tax.
study would serve as a research work that would further enlighten the level of
subject scope especially vatable resource on the importance and usefulness of
1.4 SIGNIFICANCE OF STUDY
is a vehicle of economic and administrative development in an economy and VAT
has provided to be a very useful tool of economic and fiscal measure in
Nigeria. If VAT system is improved, it will be a great boost to the government
revenue and the economy at large.
study will provide explanation and reasons for introduction of VAT in Nigeria
it will identify differences in the administration and implementation of VAT,
it will offer suggestion to problems faced by the administrators.
1.5 SCOPE OF STUDY
of the effect of Value Added Tax on final consumer, companies involved and the
economy as a whole.
2. Interviewing, questionnaire as well as a
of strategies for successful implementation of Value Added Tax.
of product, service and companies affected by the policy of Value Added Tax.
1.6 STATEMENT OF PROBLEM
introduction of Value Added Tax (VAT) requires a lot of preparation and
enlightenment on part of government because of complexity of the tax and the
need for co-operation of taxpayers. However the followings are the major
problems confronting the implementation, registration and collection of VAT in
i. Lack of proper education on the subject
ii. Inadequate of records kept by businesses.
preparation and lack of understanding of how VAT works and what government
intends to do with the revenue tends to make the tax unpopular.
in the price of goods and services that can result in inflation, growing
unemployment and under-utilization of industrial capacity.
of confidence in the capacity of government judiciously allocated fiscal
1.7 RESEARCH HYPOTHESES
hypotheses will be tested to show the level of significance of estimated
parameters and the suitability or otherwise of formulated models.
The various hypotheses are:
1. H0: That Value Added Tax
administration and implementation has no significant effect in government
source of revenue.
H1: That Value Added Tax
administration and implement has significant effect in government source of
2. H0: That Value Added Taxation in Nigeria does not
constitute double taxation on goods and services.
H1: That Value Added Tax
double taxation on goods and services.
3. H0: That the incidence of
state creation in Nigeria cannot positively affect the realization and
administration of Value Added Tax (VAT).
That the incidence of state creation in Nigeria can positively affect the
realization and administration of Value Added Tax.
4. H0: That there is no
relationship between appraisal of the effectiveness on VAT and Gross Domestic
That there is relationship between appraisal of the effectiveness on VAT and
Gross Domestic Product.
That Value Added Taxation should be abolished.
That Value Added Taxation should not be abolished in Nigeria.
1.8 RESEARCH QUESTIONS
the course of this study, some questions came under consideration, these
1. How effective is the administration of VAT
system in Nigeria?
2. What are the effects of Value Added Tax on
3. Does VAT not constitute double taxation on
4. What benefits accrue to tax payer?
steps can be taken to ensure that the full potentials of VAT are realized?
6. What are the likely prospects of VAT?
7. How does VAT influence consumer behaviour?
1.9 LIMITATION OF STUDY
is obvious that hardly can there be any administrative research work like this,
without limitations, has monopoly of knowledge, and the facts that human beings
are rational. Since, the material for carrying out this research work may not
provide conclusion answers to all the issues relating to administrative level
in getting relevant information, textbooks and relevant journals to the studies
are another inhibits factor. The available time and financial resources also
contributed but not significantly to the limitations of this research and
therefore, this inquiry many not exhaust all that is necessary for maximum
This however, leaves
room for other researchers whom may want to investigate further