This project is an attempt to analyze and evaluate the level
of success made in the implementation and management of Value Added Tax.
(VAT) was introduced in Nigeria was seen
by, many as another fixed policy that may not succeed. In the contrary, this notion was proved wrong
by the success of the Federal Board of Inland Revenue Services in the
administration of VAT. Under the Federal
Board of Inland Revenue Services, there exist a VAT directorate responsible for
the management and implementation of VAT in our country Nigeria. This piece of work focused on the strategies
adopted by the Federal Board of Inland Revenue Services facilitates payment by
the taxable individuals. A touch is also made on the analysis and comparison of
VAT with other forms of tax in Nigeria to prove its viability. Finally, the
work treated the contributions of VAT to Federal, State and local government
revenue and their expectations.
TABLE OF CONTENT
1.1 Statement of the
1.2 Purpose of study
1.4 Need for the
1.5 Assumption of the
1.6 Limitation of the
definition of terms
Literature Review of VAT in Nigeria
Reconstruction in Nigeria
2.2 VAT Returns
Implementation in Nigeria
2.4 Advantage of VAT
2.5 Problem of VAT
2.6 Administration of
2.7 Overview of VAT
2.8 The offences and
penalties in VAT administration.
2.9 Taxable goods and
2.10 Exempted goods and Service
2.11 VAT in versus
other form of tax.
2.12 VAT versus
2.13 The way
Population of the study
Sources Collection of Data
Method of Data Analysis
Data Presentation and Analysis
Analysis of Responses
5.1 Summary of
Taxation in every sense is a tool of economic
reformation. Government, the work over,
have always found ways of imposing various levies on their subjects. This is done with a view for raising revenue
for its expenditure.
In Nigeria, some of the type of taxation Include personal
Income tax, Capital gain tax, Capital transfer tax, sales tax, petroleum tax
and Withholding tax.
Value added tax as a form of tax was introduced in Nigeria
on December IST 1993. Though the
operational date was 1st January 1994.
VAT is a tax charged on the consumption of goods and service locally or
imported into the country since then; many countries have adopted this tax
policy as it has proved successful in its implementation. In Africa, up to 17 countries including
Nigeria adopted VAT and over sixty Countries in the World operated VAT since
its inceptions. The trend has kept on
growing as many countries are turning toward VAT as a remedy for the other
unsuccessful form of taxes, even though Nigeria joined the league of countries
operating VAT just of 1994. She has very unique attributes in the operation of
this new tax policy. Nigeria charges a
single rate of 5% unlike most of other countries which charge multiple high
Value Added Tax (VAT) in Nigeria is Federal Government Tax
which is central administered using the existing machinery of the Federal
Inland Revenue Service (FIRS). Value
Added Tax has a directorate within frame-work of the FIRS with the head of
office in Abuja. It was this group that
proposed VAT and in that direction, a committee was set up to conduct studies
on the implementation of VAT.
VAT replaced the sales tax whose base is regarded as narrow
and which covers only nine categories of goods plus sales and service in
registered hotels, Motels, and similar establishment. In contrast, VAT base is broader and include
most professional services and banking transactions which are high profit
generating sectors. The revenue generated
from VAT is shared among the three tiers of government, the Federal, state and
Local government. When the tax system
was first implemented in 1994, the state government received 50% of the
proceeds. While 20% went to Federal
government for covering its administration cost. In 1996, the distribution of the revenue
generated from VAT was further shared as follows: Federal government 35%, state government 40%
and the local government 25% in 1997, the distribution formular was the same as
in the 1996 distribution formula. It was
further changed as follows:
Federal Government 15%, State government 50% and Local
government 35%, the 2000 distribution formula is Federal government 15%, state
government 50% and local government 35%.
1.1 STATEMENT OF
As a result of the unsuccessful nature of the previous
economic recovery policies such as the structural adjustment program, we may
see VAT as another such policies that would join the band Wagon of failure in
the light of the above, these are some of problems associated with the
management and implementation of VAT in Nigeria.
1. The Infrastructure facilities needed for the
effective implementation of VAT
are either not in existence or in sub standard forms.
2. It is not clear
where government channel the revenue
derived from VAT in Nigeria.
3. The public either
directly or indirectly resist VAT.
4. People argue that
VAT will lead to inflationary tendency.
5. The VAT administration and the VAT able person are