Internal revenue services and the firs were involved with sales tax administration. Nigerias general vat rate is 5%, with other rates including 0% that can apply to certain transactions. A valueadded tax vat, known in some countries as a goods and services tax gst, is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destinationbased tax, where the tax rate is based on the location of the customer. Vat is charged on most goods and services provides in.
The aim of this research work is to examine the implication of nigeria value added tax vat on the payer. Pdf how productive is value added tax revenue in nigeria. An economic impact of value added tax vat on government. Failing to issue vat invoices may incur a penalty of 50% of the taxable value of the supply. The tax offices have mandate to demmand for any additional the return is due not later than 21st day of. Pdf value added tax and economic growth of nigeria.
The objective of this study is to determine the extent to which value added tax has affected the nigerian economy. Value added tax act, 2014 c value added tax act, 2014 an act to provide for the imposition assessment and collection of value added tax on the supply and importation of goods and services in the bahamas and for connected matters enacted by the parliament of the bahamas part i preliminary 1. Value added tax and economic development in nigeria. Using household survey data to grasp the effect of value added tax on, social and economic life of the populace. Ex post facto research design was adopted for this study. Vat was proposed and a committee was set up to carry out. Value added tax levied at each stage on value added in the economic chain of supply and it is a constant rate. Value added tax is a consumption tax imposed on certain category of goods and services introduced in nigeria following the recommendation of the panel set up by the government in 1991 nwezeaku, 2005. All you need to know value added tax simply regarded as vat is the tax levied on the supply of goods and services which is eventually borne by the final consumer of that good or service but collected at each stage of the production and distribution line. To find out the extent to which the tax incentives will be applied to the tax payers in enugu state. At 5% level of significance, the fstatistics computed value is 1186. Value added tax, economic growth, gross domestic product gdp, other government revenue. Uniprojects aim of providing impact of value added tax on nigerian economic growth project research material is to reduce the stress of moving from one school library to another all in the.
In nigeria, value added tax is one of the instruments the federal government introduced. Value added tax vat in nigeria is a consumption tax that was instated by the value added tax act of 1993. The major purpose of the study includes the following. Value added tax vat is a consumption tax that is being charged and embraced by many developed and developing countries, which is relatively easy to administer. The finance act is a wholesale amendment of seven 7 different tax laws, to wit. In order to meet its revenue target, government intends to broaden the tax net, enhance the effectiveness of revenue collection. Value added tax act laws of the federation of nigeria. The starting point of conventional economic growth theorisation is the neoclassical model of solow 1956. D department of accounting, ambrose alli university, pmb 14, ekpoma, nigeria abstract tax is a major fiscal policy employed by every nation of the world to generate revenue to implement developmental activities and stimulate the economy towards growth. The impact of value added tax on revenue generation in nigeria. It is a tax not on the total value of the good being. Vat rate should be increased as it will account for more revenue to the government. How productive is value added tax revenue in nigeria. Two very important types of tax in nigeria are value added tax vat and withholding tax wht and our emphasis today is the meaning and applicability of these taxes to your business.
Value added tax, revenue, nigerian economy,taxation. The administration of vat is relatively easy, unselective and difficult to evade. The objectives of the srgi include an increase of the value added tax vat rate from the current rate of 5%, identification of new revenue. It can also be said to be tax on spending or consumption levied at every stage of transaction but eventually borne by the final consumer of such goods and services. The value added tax act in this act referred to as the principal act is amended as set out in this act. The implication of nigeria value added tax vat on the. Vat was proposed and a committee was set up to carry out feasibility studies on its implementation. Nigerian value added tax system and its position on basic food items. Vat is charged on most goods and services provides in nigeria and also on goods imported into nigeria. This paper analyzed empirically the economic impact of value added tax on government revenue generation in nigeria from 1985 2015. Yakubu and jibril 20 investigated the relative impact of value added tax on economic growth in nigeria. If you purchase goods from a departmental store in nigeria, you would notice that a certain amount, value added tax, on your sales receipt. An evaluation of value added tax in nigeria myschooltrick. A recursive dynamic computable general equilibrium analysis of.
Findings shows that value added tax has not significantly affected gross domestic product of nigeria economy. The value added tax vat administration in nigeria and. This paper does not pretend to cover everything about vat, but some specifics that addresses the imperatives which are. This act may be cited as the value added tax amendment act, 2007. Value added tax in nigeria how to calculate vatable. The main objective of the study is to examine and appraise the implementation management and evaluation of value added tax in kaduna state and nigeria how vat is administered in terms of assessment computation offences and penalties collection and registration procedure in nigeria. Nigeria is a member of the economic community of west african states member trading bloc, which may affect international vat collection and regulations. Value added tax and economic growth in nigeria richard iyere oghuma, ph. Pdf value added tax vat is most common indirect tax, a consumption tax designed to increase tax revenue of government. Abstract this study examined the impact of vat on economic growth in nigeria.
Value added tax vat is a consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service. The paper empirically examined the contribution of vat to the development of the nigerian economy. Data collected from central bank of nigeria cbn statistical bulltetin. Vat has a directorate within the frame work of the federal inland revenue services firs with the head office in abuja. Value added tax vat is one of the most popular taxes. Over the years value added tax vat as a form of indirect tax was introduced in france in 1954. This paper examined tax reforms in nigeria with respect to value added tax. Specifically, the study examined the perception of the vat payers on value added tax since inception of vat in nigeria, assesses the impact of adequate accounting. As a business owner or individual, it is important to know the vat regime in nigeria for proper planning. Since then, the value added tax decree, had been amended more than half a dozen times the latest being the value added tax amendment act of 2007. Assessment of value added tax on the growth and development of nigeria economy. However the vat is expected to have application in situations where supplies are made by statutory or local authorities which are equivalent or similar to those supplied by taxable. Vat is also a replacement of sales tax in nigeria as in other countries of the world.
State and local government taxes are minimal, hence, this limits their ability to raise independent revenue and so they depend solely on allocation from federation account. Please, sit back and study the below research material carefully. Value added tax vat in nigeria is a federal government tax, which is administered using the existing machinery of the federal inland revenue services firs. Value added tax and economic development in nigeria madugba. Impact of value added tax on nigerian economic growth. The roles of value added tax in the economic growth of. According to bhartia 2009, value added belongs to the family of sales. The value added tax vat was introduced in nigeria in 1993 by the federal military government. It is a federal tax which is managed by the federal inland revenue service firs. Value added tax in nigeria top law firm in nigeria. Government revenue divided into vat, tax and total revenue registers. A cointegration of value added tax and economic growth in. Value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of commencement of business. Revenues generated through vat have always been so high since its inception muhibat, 20.
How important is the value added tax to the nigeria economy. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. Since then, the value added tax decree, had been amended. The value added tax vat in nigeria is tax payable on goods and services consumed by any person, whether government agencies, business organization or individuals.
In the same vein, zaman, okasha, and iqbal, 2012 examine the impact of value added tax in pakistans economy. Value added tax vat is administered in nigeria by the federal inland revenue service firs through the vat directorate abuja. Pdf effect of value added tax on the nigerian economy. Administration of the tax 1 the tax shall be administered and managed by the federal board of lnland revenue in this act referred to as the board. The aim was to increase the revenue base of government and make funds available for developmental purposes that will accelerate economic growth. Withholding tax withholding tax is basically an advance and indirect source of taxation deducted at source from the invoices of the tax payer. The vat is broad based while sales tax is narrower in application. Secretary means the secretary to the zonal value added tax tribunal designated under section 7, schedule 2 to the value added tax act. V, issue 2 may 2017 1188 countries including nigeria. Information technology tax 16 tertiary education tax 17 withholding tax 18 tax treaties 19 indirect tax and duties value added tax 20 customs 2and excise duties stamp duties 23 social security contributions pension 23. The vat act cap v1, laws of the federation of nigeria lfn as published in the laws of the federation of nigeria, 2004 edition, is the legal basis for the imposition and operation of vat in nigeria.
Value added tax vat was introduced by the federal government of nigeria in 1993 to replace sales tax. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. Impact of value added tax on nigerian economic growth project material. The jurisdiction of vat lies with the federal government of nigeria and the proceeds from vat are distributed among the three tiers of. After two years of preparatory work, a modified value added tax mvat committee was set up in 1992 to undertake preliminary work for the introduction of the new tax.
Nasiru ibrahim arab, clerk to the national assembly. Value added tax vat was introduced into the nigerian federal tax system. Pdf nigerian value added tax system and the concept of. This page provides nigeria sales tax rate actual values, historical data, forecast, chart, statistics, economic calendar and news. Assessment of value added tax and its effects on revenue. Evaluating the impact of value added tax on the economic. Typically, this is rarely an issue since the price is inclusive of value added tax vat. I certify, in accordance with section 2 1 of the acts authentication act, cap. Companies income tax act, petroleum profit tax act, personal income tax. Guide for value added tax filing this guide shows how the vat return form 002 is to be completed and filed either online or at tax office. Current law and practice of value added tax in nigeria abiola sanni, department of commercial and industrial law, university of lagos, nigeria abstract the value added tax vat was introduced in nigeria in 1993 by the federal military government. He argued that an increase in the rate of value added tax will affect the countrys revenue base. The valueadded tax vat is administered by the federal inland revenue service firs in abuja. O ezejiofor raymondeffect of value added tax on the nigerian economy european academic research vol.
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