The value added tax was introduced in Nigeria following the repeated calls by the international monetary fund (IMF) and World Bank and need for diversity the nation’s sources of revenue from sole dependency on petroleum profits to other sources. Value added tax, been a federal government tax and tax charged on consumption of goods and services are imposed to raise money for the government. The universal principal of taxation is that it should be accommodated by the payers and processed should endeavour to pay tax money in the federal government pocket. The tax of VAT was variously postponed. However, it eventually later took of the delay and was attribute to enable government prepare enough grounds for the take off in the area of publicity and ether precautionary measures to take care of the slight like in the price that affected goods and services in the view on the inflation the was already in the country. Ironically, despite these measured in the implementation VAT was still greatly recommended by the general Nigerian public.This was predicted on the above fears and the effect VAT would have on corporate profitability and individual. The first chapter will introduce the topic “VAT” chapter two will deal on the literature view of the work while chapter three will be on summary, conclusion and recommendation on how to improve VAT collections.
TABLE OF CONTENTS
Table of contents
1.1 General overview of the study
1.2 Statement of problems
1.3 Objectives of the study
1.4 Significance of the study
1.5 Scope of the study
1.6 Limitation of the study
1.7 Definition of terms
2.0 Literature review
2.2 The basic of the success of VAT
2.3 The offense and penalties of VAT administrative
2.4 The effect of value added tax on manufacturing sector of Nigerian economy
2.5 Merits and Demerits of value added tax
2.6 Problems of value added tax
2.7 VAT registration procedures
2.8 The administration of value added tax
3.1 Research design
3.2 Population and sample size
3.3 Sources of data
3.4 Techniques of data collection
3.5 Data collection procedure
3.6 Data Analysis techniques
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
4.1 Data presentation
4.2 Data analysis
4.3 Hypothesis Testing
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of findings
1.1 GENERAL OVERVIEW OF THE STUDY
Value added tax was introduced in Nigeria on 1st December 1993 through the stated operation by 1st January 1991. Value added tax charged on consumption of goods and services made imported or within the country. VAT is taxes collected by federal government.
VAT have provided successfully in the implementation that is role over 20 countries in the world operates value added tax since it came into existence, many country are looking forward to value tax as a remedy to their unsuccessful form of tax.
Nigeria has a very attribute in the operation of the new poly even though she joined the league of countries charge multiple rate unlike Nigeria who charge a single rate of 5% value added tax been federal government tax that has its centrally administered using the existing machinery of federal inland revenue services (FIRS).
Value added tax replaced tax sales whose bases is regarded as narrow and which covers only nine categories of goods plus sales and services in registered hotels and similar establishment. Value added tax has a directorate within the framework of the FIRS with the head office in Abuja, it was the group that proposed value added VAT.
And in that direction a committee was set up to conduct feasibility studies on the implementation of value added tax. The revenue generated from value added tax is share among the three tiers of government.
When the tax system was first implemented in 1994 the state government received 8% of proceed when 20% went to the federal government for recovering it, with its administration ads in 1996, the generated revenue received from value added tax was distributed and further changed as follows state government 40%, federal government 30% and local government 25%, in 1997 the distribution formula was same as in 1996 but as in 1998 distribution formula further change as federal government 45% and local government 30% in 1999 distribution was further changed as follows federal government 15%, state 50% while local 35%, finally 2000 distribution formula federal government 15%, state 15% and local 30%.
RESEARCH QUSTION HYPOTHESIS
Value added tax VAT is a form of indirect taxation introduced by the Federal Inland Revenue Services (FIRS)
v With respect to value added tax administration, explain the prevision that deal with registration by government ministries and non residents
v State three (3) factors and consideration that informal the rationale behind replacing sales tax with the value added tax.
v What is the remedy available to a person aggrieved by an assessment under VAT administration?
1.2 STATEMENT OF PROBLEM
Due to the unsuccessful of the previous economic recovery policies, such as the structural adjustment programme, many may see value added tax as another such policies that would join the band wagon of failure in the light of the above, these are some of the implementation of value added tax in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The major objectives of the study are:
v The job will ascertain people reaction towards the new tax policy, value added tax
v The work will attempt to investigate and identify the areas of government channels, its value added tax returns value
v The research work will assess and ascertain the level of effectiveness of the value added tax administration in Nigeria
v The work will value and ascertain the level of infrastructure and provision for the value added tax purpose.
v The work will also investigate and ascertain the role of illiteracy level play in the operation of value added tax in Nigeria.
1.4 SIGNIFICANCE OF THE RESEARCH
The studies are done to asses and determine the desirability of value added tax (VAT) as to compare to other taxes. Value added tax in its sub division is aiming at attending set goals.
The study will review the overall tax system that will increase revenue of the government with other tax system that will also increase revenue for the government, tack with economic situation and inflation upon.
1.5 SCOPE OF THE STUDY
Problem arose as to where and how to collect data taxation being a very sensitive issue) most tax payers find it difficult to respond to questions correctly because they are not happy and could no longer escape tax like in the old tax system.
For this reason, the study will look into the administration, the effect, merit and demerits and problem of VAT.
1.6 LIMITATIONS OF STUDY
The study of this course is limited by certain factors among which are:
i. Time constraint
ii. Lack of adequate data and information with respect to value added tax as it is being applied in Nigeria
iii. Lack of finance
1.7 DEFINITION OF TERMS
Value added tax could be defined as follows:
v VAT goods and services: These are goods and services that are not exempted from value added tax.
v Taxable activity: This includes other activities in exempt list conduct as a business vocation trade profession
v VAT records: Two categories of records exempted to be kept by all VAT able people in respect of input and output.
v Vat able derives: Is to stimulated VAT from defaulters and enforce prompt remittance of VAT payable.
v VAT able person: A VAT able person is one who trades in VAT goods and services for consideration.
v Taxable services: All services rendered by financial institutions to their customers (excluding peoples bank, community bank and mortgage institutions)
v VAT tribunal: It has been set up to try case about VAT, it has the status of federal high court and its judgment is enforced as if it were the judgment of a federal high court.