In order to meet its revenue target, government intends to broaden the tax net, enhance the effectiveness of revenue collection. 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. This page provides nigeria sales tax rate actual values, historical data, forecast, chart, statistics, economic calendar and news. What you need to know about value added tax vat in nigeria. Value added tax vat and inflation in nigeria 1990 to 2003. These include goods and services supplied in nigeria or imported. Value added tax vat in nigeria is a consumption tax that was instated by the value added tax act of 1993.
The roles of value added tax in the economic growth of. It also relates to section 25c of companies income tax act cita cap. It highlighted the reasons for the replacement of sales tax with value added tax vat, yearly contributions of value added tax to the total revenue base of the nation and revealed that value added tax vat was designed to favour development at the lower tier level of government. Value added tax vat and price stability in nigeria 54. This act may be cited as the value added tax amendment act, 2007. This study investigated the determinants of vat revenue in nigeria. Value added tax vat is a tax on spending and it is borne by the final consumer of vatable goods and services, because it is included in the price paid value added tax known as vat for short is one of the types of taxes in nigeria, under the indirect tax category it replaces sales tax, which was characterized by a lot of lapses, inadequacies and restrictive coverage.
Over the years value added tax vat as a form of indirect tax was introduced in france in 1954. Nigerian value added tax system and its position on basic food items. Nigeria is a member of the economic community of west african states member trading bloc, which may affect international vat collection and regulations. A valueadded tax vat, known in some countries as a goods and services tax gst, is a type of tax that is assessed incrementally. I certify, in accordance with section 2 1 of the acts authentication act, cap. Aruwa, phd department of accounting, nasarawa state university, keffi abstract. In the same vein, zaman, okasha, and iqbal, 2012 examine the impact of value added tax in pakistans 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.
This paper examined tax reforms in nigeria with respect to value added tax vat. Recently decided cases on value added tax vat tax faculty of the institute of chartered accountants of nigeria first quarter 2014 volume 2 issue 1 first quarter 2014 a. 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. V1 lfn 2004 as updated to may 2007 that requires all companies to file returns in prescribed forms. C 21 lfn 2004 as updated to may 2007 and section 15 of value added tax act vata cap. Value added tax vat was introduced by the federal government of nigeria in 1993 to replace sales tax. Vat which to some extent throw light on some of the provisions. It is levied on the price of a product or service at each stage of production, distribution or sale to the end consumer, except where a business is the end consumer which will reclaim this input value.
The valueadded tax vat is administered by the federal inland revenue service firs in abuja. The buyers of goods and services in the case of value added tax are taxed and this is country to sales tax where the produces or sellers of goods and services pay the tax. 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 drop in oil prices, which has led to dwindling revenues for government in nigeria, has once again brought into. Vat is imposed on the net sales value of nonexempt qualifying goods and services in nigeria okoyeuzu, 20. The effect of value added tax vat in the economic development of nigeria a case study of federal inland revenue service firs abuja abstract value added tax vat have tremendous roles to play in the academic development of the studies have shown that an increase in the number and variety of value added tax plus. The impact of value added tax on revenue generation in nigeria. Value added tax vat is a consumption tax, levied at each stage of the. Visit this page for an executive summary of nigerias tax structure and rates, by salestaxhandbook. Pdf effect of value added tax on the nigerian economy. However the vat is expected to have application in situations where supplies are made by statutory or local authorities which are equivalent or. Value added is the difference between business sales and purchase of goods and services from other. There shall be exempt from the tax the goods and services listed in. 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 news latest breaking stories and top. Value added tax vat vat is a consumption tax levied on the supply of all goods and services supplied in or imported into nigeria, except those specifically exempted from the tax. They are neither binding on nor create estoppel against the firs. 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. The vat system in nigeria is administered by the federal inland revenue service firs. Read all the latest news, breaking stories, top headlines, opinion, pictures and videos about value added tax from nigeria and the world on today. At 5% level of significance, the fstatistics computed value is 1186. Synopsis of value added tax administration in nigeria. 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. V, issue 2 may 2017 1188 countries including nigeria. Computer science and engineering final year complete projects and materials, computer science final year complete project project topics on web design. The standard rate of tax is currently 5% of invoice value of goods and services except items specifically stated as exempt or zerorated.
The section 3 parts i and ii of the act exempt some listed. Value added tax and economic development in nigeria. Where actual profits cannot be determined, the federal inland. 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. It is levied on the price of a product or service at each stage of production, distribution or sale to the end consumer, except where a business is. Nigerias general vat rate is 5%, with other rates including 0% that can apply to certain transactions. The aim was to increase the revenue base of government and make funds available for developmental purposes that will accelerate economic growth. Vat is charged on most goods and services provides in nigeria and also on goods imported into nigeria.
How important is the value added tax to the nigeria economy. Vat was proposed and a committee was set up to carry out. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. The main vat rate in nigeria is 5% with a proposal to raise to 7. Output vat is the vat that is due on vatable supplies. O ezejiofor raymondeffect of value added tax on the nigerian economy european academic research vol. Assessment of value added tax on the growth and development of.
Jun 10, 2017 the development of value added tax scheme is a recent phenomenon in the history of taxation in nigeria who creation was given in 1940 by the federal government through central bank of nigeria cbn. Only a limited number of supplies are nilrated, meaning any vat suffered may be recredited to the tax payer. 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. Oct 23, 2014 at 5% level of significance, the fstatistics computed value is 1186. A vat is an indirect tax, in that the tax is collected from. The interesting nature of value added tax has attracted a lot of attention in intellectual disused at seminar, workshop books and research. Azubike1 michael okpara university of agriculture umudike umuahia abia state nigeria. Value added tax and economic growth in nigeria john chika onwuchekwa department of accounting, rhema university, aba, abia state, nigeria suleiman a. Pdf nigerian value added tax system and the concept of. This paper examined tax reforms in nigeria with respect to value added tax. Value added tax vat is one of the most popular taxes. 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. Using household survey data to grasp the effect of value added tax on, social and economic life of the populace.
Value added tax vat was introduced by the government of nigeria to enhance. Nigeria company formation offer corporate services with packages at affordable price, without any compromise. 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. Tax experts had argued in different ways as regards the success of value added tax in nigeria. Value added tax vat and price stability in nigeria 54 pages chapter 15 quantity get full work categories. The paper also recommended that value added tax vat act should be amended based on destination principle to impose vat on imported services rendered. The importance, how to, effect causes relationship, comparison, history, role, solutions are discussed. Value added tax in nigeria how to calculate vatable. Get free research paper on value added tax in nigeria. 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. Vat free but the nigerias situation is different because its fiscal position is weak. Sep 11, 2014 the net vat in a tax period is the amount to be remitted to the firs.
Vat was proposed and a committee was set up to carry out feasibility studies on its implementation. In the nigeria context, it is a consumption tax of five percent 5% imposed on every vat able goods and services of every stage of production. Abstract the study empirically examined the impact of value added tax on the nigeria economy, between the period of 19942006. 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. Vat has a directorate within the frame work of the federal inland revenue services firs with the head office in abuja. An act to impose and charge value added tax on certain goods and. These include value added tax, capital gains tax, withholding tax and stamp duties. Ghanas parliament has enacted the value added tax amendment act, 2017 act 948 to amend the value added tax act, 20 act 870. Value added tax and economic development in nigeria madugba, joseph ugochukwu1 joseph,u. 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. Value added tax and economic growth in nigeria john chika. Nasiru ibrahim arab, clerk to the national assembly. A value added tax vat, known in some countries as a goods and services tax gst, is a type of tax that is assessed incrementally.
It is derived by multiplying the value of the aggregate supply by the tax rate, while input vat is what is charged on business purchases and expenses. The net vat in a tax period is the amount to be remitted to the firs. Nov 27, 2016 project topic impact of value added tax on the nigerian economy. Based on these revelations, the paper recommends that value added tax rate should be increased from five 5 percent to 10 percent in nigeria. The value added tax act originally consisted o f 42 sections and three schedules.
This paper does not pretend to cover everything about vat, but some specifics that addresses the imperatives which are. The study period spans economic cycles for about 66 percent of the life of. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. The paper empirically examined the contribution of vat to the development of the nigerian economy. 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. Synopsis of value added tax administration in nigeria the. Finance minister, kemi adeosun, said yesterday that more than half of nigerias value added tax, vat, comes from lagos state alone.
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. Nigeria has a national valueadded tax vat of 5% as of 2020, administered by the federal inland revenue service firs. Pdf the objective of this study is to determine the extent to which value. An evaluation of value added tax in nigeria myschooltrick.
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