Azubike1 michael okpara university of agriculture umudike umuahia abia state nigeria. This tax is a replacement for the old sales tax which had a very narrow field of goods to which this tax could be charged. This is an automated tax system and it helps to track the tax position of every nigerian that has the tin and those who do not have are compelled to go for theirs in order to make tax tracking very easy. 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. Revenue implications of nigerias tax system in nigeria. Any person or individual, corporate sole, organizations who consumes or buys any taxable product or service will have to pay a tax levy known as value added tax vat in nigeria. In measuring nigerian economy, gross domestic product gdp, per capital income pci and total revenue tr. Value added tax and economic development in nigeria madugba, joseph ugochukwu1 joseph,u. Value added tax and economic development in nigeria madugba. The purpose was to simplify the process so tax collection in nigeria.
Visit this page for an executive summary of nigerias tax structure and rates, by salestaxhandbook. Aruwa, phd department of accounting, nasarawa state university, keffi abstract. This paper attempts to examine the relationship between value added tax and economic development. Flaws of the withholding tax system in nigeria part 1 the process of obtaining refund is not only rigorous but almost impossible in practice. Flaws of the withholding tax system in nigeria part 1. Sep 20, 2012 revenue implications of nigerias tax system in nigeria 1.
Vat is charged on most goods and services provides in nigeria and also on goods imported into nigeria. Dike, fcti president and chairman of council of the chartered institute of taxation of nigeria citn at the nigerians in despora organisation nido uk south investment conference on the 17th 18th march 2014. Value added tax and economic growth in nigeria john chika onwuchekwa department of accounting, rhema university, aba, abia state, nigeria suleiman a. The drop in oil prices, which has led to dwindling revenues for government in nigeria, has once again brought into sharp focus the need to diversify the source of. Value added tax in nigeria how to calculate vatable. Oct 23, 2014 this research work studied the impact of value added tax on revenue generation in nigeria. 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. Get free research paper on value added tax in nigeria. Nasiru ibrahim arab, clerk to the national assembly. Nigeria pkf assurance, audit, tax, advisory and business. Taxation in nigeria plus history of taxation in nigeria. Every taxable firm has a duty to issue a tax invoice for every single vat able transaction carried out by the business. The study focuses on the impact of petroleum profit tax, company income tax, personal income tax, value added tax revenue on nigerias economic growth between 1980 and 20.
In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. The importance, how to, effect causes relationship, comparison, history, role, solutions are discussed. Pdf nigerian value added tax system and the concept of. This is a study of the properties of the nigeria s tax system particularly the bases of the company income tax, value added tax and personal income tax. You can remove the tag, or use the page viewer web part, which supports the html tag. This enabling environment which came into being on the basis of section 8q of. This study provides a useful insight for the government, stakeholders and policy makers into the importance of tax revenue. Pdf effect of value added tax on the nigerian economy. This act may be cited as the value added tax amendment act, 2007. 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. Value added tax vat is a consumption tax, levied at each stage of the.
Secondary data were used in this study, the data were collected from cbn statistical bulletin also gathered from journals and textbook that is related to the research topic, the study. The study is aimed at the appraisal of revenue generation in nigeria. Value added tax vat and inflation in nigeria 1990 to 2003. 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.
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. Value added tax and economic growth in nigeria john chika. A tax invoice is similar in many ways to a normal sales or purchases invoice, except that it has provision for vat registration number and vat payment at the prescribed rate. The objective of this study is to determine the extent to which value added tax has affected the nigerian economy. Makes it chargeable on all goods and services goods and. I certify, in accordance with section 2 1 of the acts authentication act, cap. Under current nigerian law, taxation is enforced by the.
Activities of nonnigerian companies, which would attract tax in nigeria and other special issues, are spelt out in the laws. What you need to know about value added tax vat in nigeria. Vat has a directorate within the frame work of the federal inland revenue services firs with the head office in abuja. The study investigated the role of tax administration in revenue generation in nigeria between 1994 and 2015. This paper does not pretend to cover everything about vat, but some specifics that addresses the imperatives which are. Taxes in modern economics are the most important source of government revenue. Nigeria has a national valueadded tax vat of 5% as of 2020, administered by the federal inland revenue service firs. Tax experts had argued in different ways as regards the success of value added tax in nigeria.
Some even said that the success of vat in developing country like nigeria, is going to be dependent on the level of publicity bring into it, as well as the level of education of potential prayers. Trade union congress of nigeria tuc, has criticised an aspect of the finance bill signed into law by president muhammadu buhari on monday, endorsing the approval of the increase in value added tax. The personal income tax pit is the most common tax type in the country. It is a federal tax which is managed by the federal inland revenue service firs.
Jun 14, 2017 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. One of the attempts to expand the tax net with minimum resistance and also to reduce tax evasion so that most of the tax income would get to the nigerian government is the introduction of value added tax in nigeria in 1993. The impact of value added tax on revenue generation in nigeria. In order to meet its revenue target, government intends to broaden the tax net, enhance the effectiveness of revenue collection. Ex post facto research design was adopted for this study. About the law this piece of legislation was enacted to impose and charge value added tax on certain goods and services to provide for the administration and tax and related matters. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. As a matter of fact, arsenal has a higher chance of winning the champions league than a.
Development of any tax policy on tax revenue for economic development should better be based on human development index rather than gdp. Nigerian value added tax system and its position on basic food items. The tax authority now has autonomy to assess, collect and record tax. Examples are turnkey projects, allocation of income and expenditure between the foreign company and its branch in nigeria, transfer pricing etc. A value added 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. Taxpayers are subjected to intensive audits and even when the claims are certified, refunds are rarely granted. Synopsis of value added tax administration in nigeria the. Countries introduce a value added tax vat because they are dissatisfied with their existing tax structure. An evaluation of value added tax in nigeria myschooltrick. Taxation and fiscal regulations in nigeria introduction the nigerian tax system has undergone significant changes in recent times.
The study period spans economic cycles for about 66 percent of the life of. Before then, sales tax was under the jurisdiction of the states and generally poorly. Value added tax in nigeria the standard vat rate in nigeria is 5% invoice value of goods and services except of course on items exempted or zerorated vat goods. Aug 09, 2016 taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. Value added tax vat in nigeria is a consumption tax that was instated by the value added tax act of 1993.
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