to Journal of Economic and International Finance vol. 3(8), 492-503, August
is a developing country and emerging economy whose exports are mainly crude
oil. Her other natural resources asserted by Economic watch (2011) include:
Natural gas, tin, iron ore, coal, limestone, lead, zinc and arable land. Her
land mass covers about 923,768sqkm and she has a population of about
to Tran (2008), emerging economies are nations that have large territories and
populations, and they are undertaking extraordinary development projects that
call for new infrastructures, such as power — generation plants and
telecommunication systems. These countries have pursued economic policies
leading to faster growth and expanding trade and investments with the rest of
infrastructural developments demand a lot of resources and funding. By
assertion of Access Bank (2011), Value-Added-Tax (VAT) is one of the ways of
funding infrastructural developments. And to proceed further in this work are
unfolding of detailed information on VAT.
the world over have devised various means of obtaining and paying for the
resources needed to meet their ever increasing responsibilities. In civilized
societies, requisition of financial resources by funds raised from several
sources such as borrowing, sale of goods and services et cetera and taxation is
the oldest and the most significant source of fund to the Government. Taxation
is considered significant to Government because it is one of the most useful
tools for achieving the objectives of economic stabilization.
to Nwadighoha (2007), tax is a compulsory levy imposed by a public authority on
incomes, consumption and production of goods and services. Such levies are for
example, made on personal income (consisting of salaries, business profit,
interest income, dividends, royalties etc) company profits, petroleum profits,
capital gains and capital transfers.
definition points tOwards three characteristics of tax, viz:
(i) It is
a compulsory contribution imposed by the government on the people residing in
the country. Since it is a compulsory levy, any person who refuses to pay tax
is liable to punishment
is a payment made by taxpayers which is used by the government for the benefit
of all the citizens. The state uses the revenue collected from taxes for
providing hospitals, schools, and public utility services, etc. which benefits
is not levies in return for any specific services rendered by the Government to
the taxpayer. An individual cannot ask for any special benefit from the state
in return for the tax paid by him, it implies that the tax payer cannot claim
something equivalent to the tax paid (quid proquo) from the Government.
was introduced in Nigeria
for the first time by the enactment of Decree 102 of 1993, which came into
effect on 1st January 1994.
This was the legal instrument that brought VAT into existence and the effective
date for its commencement and implementation of VAT at this date. What was in
place was Sales Tax which was immediately repealed and VAT largely expanded the
tax network i.e. Federal, State and Local Government participation in its
collection and sharing of revenue.
Added Tax is a multi stage tax imposed or levied and collected on transactions
at all the various stages of sales and distribution of such goods and services
designated for VAT purposes.
accounting, Value Added Tax refers to the incremental value, which a producer
employing labour adds to his raw materials, from the extractive stage, to
processing stage (work in- progress) to its completion as a finished product or
purchases prior to the processed goods and services. VAT is the tax levied on
the value added as written above. It is a consumption tax. Like all indirect
taxes the burden of this tax is passed on to the final consumer who eventually
pays the tax. The rate of tax is 5%. Value Added Tax is a consumption that has
been embraced by many countries worldwide. Because it is a consumption tax, it
is relatively difficult to evade. The yield from VAT is a fairly accurate
measurement of the growth of an economy since purchasing power which determines
the yield increases with economic growth.
literature elsewhere has shown that VAT is a high revenue yielding tax
especially when it covers retail level. It is based on this premise that the
researcher wants to show the effects and Administration of Value Added Tax.
attitude of Nigerians towards taxation is worrisome as many prefer not to pay
tax if given the opportunity. The economy continues to lose huge amount of
revenue through the unwholesome practice to tax, avoidance and tax evasion.
This loss of revenue can change the fortune of many economies; particularly,
developing countries like Nigeria.
problem has been lingering for so long which urgent attention and solution is
over due to the cost of collecting tax in Nigeria. Both social and economic
cost is too high to the extent that if left unchecked the cost may soon
outweigh the benefit or value derived from such operation and that will not the
appropriate for the system.
VAT is one of the instruments the federal government introduced to generate
additional revenue. Yet, most prominent Nigerians and interest groups had
spoken against its introduction. It would appear that VAT is froth with some
problems. For this purpose, this research work shall examine the effect and
administration of Value Added Tax in Nigerian economy.
major objectives of this study is to examine the effect and administration of
Value Added Tax in Nigerian Economy, with particular reference to Federal Board
of Inland Revenue. Therefore, the specific objectives are as follows:
ascertain whether sharp practices in administration between the staff of FBIR
and assess consumers contributed to tax evasion.
ascertain if there is any variation between financial statement used for AGM
and that sent to FBIR for tax administration.
ascertain whether loss of confidence in government officials has contributed to
order to meet up with the above objective, the following questions were
what extent do sharp practices in administration between the staff of FBIR and
assess consumers contributed to tax evasion?
there any variation between financial statement used for AGM and that sent to
FBIR for tax administration?
what extent do loss of confidence in government officials has contributed to
VAT one of a vital instrument of revenue to the government?
order to answer the above research questions, these hypotheses were formulated:
practices in administration between the staff of FBIR and assess consumers does
not contribute to tax evasion.
practices in administration between the staff of FBIR and assess consumers does
not contributed to tax evasion.
are no variations between financial statement used from AGM and that sent to
FBIR for tax administration.
are variations between financial statement used from AGM and that sent to FBIR
for tax administration.
of confidence in government officials has not contributed to tax evasion.
of confidence in government officials has contributed to tax evasion.
the study has its scope limited to the federal board of Inland Revenue Ebonyi
study significant as it represents a bold attempt into an area of very scanty
literature, without prior background knowledge in this premise students of
Universities or polytechnics who offer taxation or scholars and academicians
would find this research work very useful for further research.
it is the belief of the researcher that when completed, the result will be
useful to the tax payers and the business communities, and the federal, state
and Local Government Organizations charged with the duty of administering taxes
are no variation between financial statement use for AGM and that sent to FBIR
for tax administration.
is not an assessment of tax, that is a source of revenue based on
does not impact on the Economic Development of Nigeria
research study is limited to detailed study of (VAT) and assess its actual
contributions towards the economic development of Nigeria.
could not achieve hundred percent because of absence of revenue. Other
limitations include inter- alia.
TIME CONSTRAINT: This
also limits the scope of the study because of the need to hand in the completed
work before expiration of deadline.
FINANCIAL CONSTRAINT: This no doubt played down on the extent
of the research work that could have been carried out.
POOR RECORD: Data keeping posed on very conspicuous
limitation in the process of carrying out this research. Lack of detailed from
our libraries and statistical offices proved costly data in carrying out this
order to avoid problems of semantics, the following technical terms have been
precise as they relate to the context of the research work.
AUTHORITY: This is the body
appointed by the board for the purpose of assessing tax payable.
AND EFFECTIVENESS: Horngreen
(1984) defines efficiency as an optimum relation between input and output
whereas effectiveness is the accomplishment of pre date ruined objective. Tax
collected can only be said to be effective when a high proportion is actually
collected. Similarly for efficiency and assessment should be less than the
revenue accruing from such expenditure.
INLAND REVENUE SERVICE (FIRS): This
is the body set up by Section 5.1 of ITA (1979) and charged with the overall
administration of companies income tax act.
INCOME: There is no statement that defines the
word “income” in taxation status. However, for the purpose of this study reference
is made to Section 5.4 (2) (6) of income tax management act (ITMA) 1961, which
recognizes income as including any amount deemed to be income under the act.
ARREARS: These are assessment
of tax during the preceding period whose payment is received at the current
EVASION: Is a fraudulent,
dishonest intentional distortions or concealment of fingers by the tax payer in
order to reduce the tax payable. It is a criminal and deceitful was of not
paying tax or reducing ones tax liability. These offences are punishable under
law. According to Longman Dictionary of Contemporary English Tax evasion are
the illegal ways of paying less tax.
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