TABLE OF CONTENTS
Table of Contents iv
Background of the Study 2
Statement of Problem 3
Objective of the Study 4
Relevance of the Study 5
Scope and Limitation of the Study 6
Definitions of Terms 7
Nature of VAT 8
Meaning of VAT 9
Introduction of VAT 10
VAT Administration and Policies 11
VAT and Sales Tax 21
Salient Provisions of VAT 1993 23
RESEARCH DESIGN AND METHODOLOGY
Historical Background of (Federal Board of
Functions of the Case Study 26
Research Design 27
Description of Population 28
Sampling Plan 29
Administration of Questionnaire and
Limitations of Methodology 30
ANALYSIS OF FINDINGS
VAT Collection Procedures 31
VAT The Nigeria Experience 33
Importance of VAT on Government Tax Revenue 36
Problems of VAT 38
Prospects of VAT 40
SUMMARY, CONCLUSION AND RECOMMENDATION
Value Added Tax
is a consumption tax, which came to existence on first December, 1993, by decree number 102 of
1993 while its actual implementation commenced on first January, 1994. It is a transition from Lagos state sales tax.
The tax was introduced sequel to the report of the 1991 study group on the
review of indirect taxes in Nigeria
under the chairmanship of Dr. Sylvester U. Ugoh.
The study group
conducted a feasible study of the new tax, which after consideration was
approved by the government.
of value Added Tax in Nigeria
marked the phasing out of the sales tax, which has been in force in Nigeria since
1986. Sales tax can be defined as tax imposed on the floe of goods and services
in production. A characteristics of this tax is that it deals with goods and
services rather than the personnel circumstances of individual. Sales tax
originated in Nigeria
in 1982 when the Lagos State Government introduced sales tax on a number of
goods and services.
successful in terms of revenue generation, because of this many other states
introduced it in other to foster growth and development in the society. The
role of the government in Nigeria
mixed economy include:
Provision of the legal framework and a social
environment conductive to the effectiveness of the price system.
Creation and maintenance of social and economic
Redistribution of income
Reallocation of resources
Provision of macro economic objective
In other for the
government to accomplish this tax, it requires substantial revenue which will
be derived from the value added tax.
OF THE STUDY
towards value added tax in Nigeria
started with the acceptance of the recommendation of the study group on Nigeria
Tax system and Administration in Nov. 1991.
decision was made public in the 1992 budget speech. This resulted in the
setting up of the modified value added tax (MVAT) committee on 1st June 1992 as recommended
by the study group. Government on its own wisdom as informed by administered by
the FIRS which already is charged with the serious responsibility of
administering most other taxes including petroleum profit tax (PPT).
Value Added Tax
is a tax imposed on the value that is added to goods and services as they pass
through the registered person in the course of their taxable activities up to
the final consumer. The net effect is that the final consumers pays vat while
the registered person’s role in the process is to collect the tax for the
Federal Board of Inland Revenue FBIR. It is important to consider some details,
some elements in the definition of VAT, as this will explain the trouble that
the VAT Directorate of FBIR must go into in the identification and registration
of taxable persons.
bedevil the introduction of VAT because of the poor Administration and
implementation of VAT is subjected to:
This often rises
doubt about the effectiveness of VAT other problems include:
Why is the provision for establishing and
administering of VAT inconsistence?
What are the legal backings on authority to pay
How can the administration of VAT be managed?
How realistic is the cost of training and
development of administration of VAT?
How is tax management involve in the
administration of VAT?
Is there any deficiency in the tax system in Nigeria?
Why are Government policies not consistent?
What are the causes of delay on the part of
government agencies in carrying out government legislation?
How can indiscipline, corruption and
mismanagement or government fund be minimized?
OF THE STUDY
project focuses on the effect of value Added Tax on revenue generation of
government and underlisted points are the objective to carry out this
To analyse the basis purpose of tax.
To make a careful consideration of the
implementation of VAT.
To examine the method of calculating VAT
To find out and state the causes of deficiency
To substantiate the introduction of VAT
To acquire more knowledge on the effect of VAT.
To investigate ways to minimize tax evasion and
Value Added Tax
being a new nomenclature in the Nigeria
tax system, the study aims at analyzing the procedure established for its
OF THE STUDY
implementation of VAT and effective and efficient collection of the tax, hang
primarily on a sound system of operation designed especially for the constant
review in order to make appropriate where necessary to reduce or eliminate any
Being a new tax
system, there is also the need to look beyond now and into the future to
ascertain the relevance of the new form of tax to the Nigeria
The study is
also important for the following reasons:
It will create a general awareness amongst
It helps to determine whether implementation
operating vat is a worthwhile venture.
It will serve as a documentation in the Nigeria vat
It will ratify weakness in the procedure already
It will assist decision making in policy
formulations that is in respect to tax matters especially VAT.
AND LIMITATIONS OF THE STUDY
The scope of the
centers only on the effect of VAT operation in Nigeria associated with it, the
potential of VAT in government revenue.
of the sampled are restricted to Lagos,
the researcher however is of the opinion that Lagos being the commercial never centre in Nigeria in a
good representation of what obtain in Nigeria.
records and information were received from Federal Board of internal revenue
(FBIR). Other sources of data are the response given by the people in the
work also been designed exclusively to cover three main categories of people.
They are the relevant federal board o internal revenue, tax pay and the
LIMITATIONS OF THE STUDY
In the process
of carrying out this research study, there are some limited factors envisaged
in the course of this project work.
are the underlisted factors:
Inadequate time to thoroughly carryout the
Conferred access to require information.
means of raising money through tax.
Tax: compulsory levy enforced by governments on
corporate bodies and individuals to raise revenue.
tax: Tax whole incidence full on the tax payer.
Authority: The body empowered by law to administer tax.
incidence: Tax burden that is final consumer that bears the burden in
added tax paid on spending.
goods and services on which tax is payable.
person: Any person (individual or corporate).
tax: Tax whose incident is usually transferred by the initial suffered of
the tax to another person.
vat: Vat paid by the ratable person on goods ad services purchased by or
supplied to him.
vat: Vat receive by the ratable persons on goods and services sold or
supplied by him.
name for income generation from a source.