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. The aim was to increase the revenue base of government and make funds available for developmental purposes that will accelerate economic growth. 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. Value added tax in nigeria how to calculate vatable. 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.
Where actual profits cannot be determined, the federal inland. This paper examined tax reforms in nigeria with respect to value added tax vat. This paper does not pretend to cover everything about vat, but some specifics that addresses the imperatives which are. Based on these revelations, the paper recommends that value added tax rate should be increased from five 5 percent to 10 percent in nigeria. An act to impose and charge value added tax on certain goods and. It also relates to section 25c of companies income tax act cita cap. Value added tax and economic growth in nigeria john chika onwuchekwa department of accounting, rhema university, aba, abia state, nigeria suleiman a. C 21 lfn 2004 as updated to may 2007 and section 15 of value added tax act vata cap. Value added tax and economic development in nigeria madugba, joseph ugochukwu1 joseph,u.
Pdf nigerian value added tax system and the concept of basic. Over the years value added tax vat as a form of indirect tax was introduced in france in 1954. Visit this page for an executive summary of nigerias tax structure and rates, by salestaxhandbook. 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. The interesting nature of value added tax has attracted a lot of attention in intellectual disused at seminar, workshop books and research. Nigerian value added tax system and its position on basic food items.
The valueadded tax vat is the worlds most common form of consumption tax, in place in more than 160 countries, including every economically advanced nation except the united states. The impact of value added tax on revenue generation in nigeria. Synopsis of value added tax administration in nigeria the. Vat is charged on most goods and services provides in nigeria and also on goods imported into nigeria. O ezejiofor raymondeffect of value added tax on the nigerian economy european academic research vol. 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. 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. Value added tax vat and inflation in nigeria 1990 to 2003. 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. Value added tax news latest breaking stories and top. Vat free but the nigerias situation is different because its fiscal position is weak. The valueadded tax vat is administered by the federal inland revenue service firs in abuja.
Value added tax and economic development in nigeria madugba. At 5% level of significance, the fstatistics computed value is 1186. Call us or complete our online free no obligation quotation request and. 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 paper also recommended that value added tax vat act should be amended based on destination principle to impose vat on imported services rendered. The net vat in a tax period is the amount to be remitted to the firs. Synopsis of value added tax administration in nigeria. I certify, in accordance with section 2 1 of the acts authentication act, cap. Value added is the difference between business sales and purchase of goods and services from other. Assessment of value added tax on the growth and development of. Value added tax vat is one of the most popular taxes. 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.
Finance minister, kemi adeosun, said yesterday that more than half of nigerias value added tax, vat, comes from lagos state alone. Vat which to some extent throw light on some of the provisions. 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. Tax experts had argued in different ways as regards the success of value added tax in nigeria. 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. 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. Value added tax vat is a consumption tax, levied at each stage of the.
This page provides nigeria sales tax rate actual values, historical data, forecast, chart, statistics, economic calendar and news. In order to meet its revenue target, government intends to broaden the tax net, enhance the effectiveness of revenue collection. 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. V, issue 2 may 2017 1188 countries including nigeria. Value added tax vat was introduced by the federal government of nigeria in 1993 to replace sales tax.
An evaluation of value added tax in nigeria myschooltrick. Nov 27, 2016 project topic impact of value added tax on the nigerian economy. Pdf nigerian value added tax system and the concept of. Oct 23, 2014 at 5% level of significance, the fstatistics computed value is 1186. Aruwa, phd department of accounting, nasarawa state university, keffi abstract. 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. 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 vat system in nigeria is administered by the federal inland revenue service firs. 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.
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. The roles of value added tax in the economic growth of. These include value added tax, capital gains tax, withholding tax and stamp duties. Pdf effect of value added tax on the nigerian economy. This study investigated the determinants of vat revenue in nigeria. 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. 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. 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. 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. The section 3 parts i and ii of the act exempt some listed. The study period spans economic cycles for about 66 percent of the life of. In the same vein, zaman, okasha, and iqbal, 2012 examine the impact of value added tax in pakistans economy.
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 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. Vat was proposed and a committee was set up to carry out feasibility studies on its implementation. The main vat rate in nigeria is 5% with a proposal to raise to 7. These include goods and services supplied in nigeria or imported. Read all the latest news, breaking stories, top headlines, opinion, pictures and videos about value added tax from nigeria and the world on today. Using household survey data to grasp the effect of value added tax on, social and economic life of the populace. Output vat is the vat that is due on vatable supplies.
Nigeria is a member of the economic community of west african states member trading bloc, which may affect international vat collection and regulations. 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. Get free research paper on value added tax in nigeria. 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. Nigerias general vat rate is 5%, with other rates including 0% that can apply to certain transactions.
The paper empirically examined the contribution of vat to the development of the nigerian economy. Value added tax vat in nigeria is a consumption tax that was instated by the value added tax act of 1993. The standard rate of tax is currently 5% of invoice value of goods and services except items specifically stated as exempt or zerorated. Nigeria has a national valueadded tax vat of 5% as of 2020, administered by the federal inland revenue service firs. 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 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. Abstract the study empirically examined the impact of value added tax on the nigeria economy, between the period of 19942006. Value added tax vat was introduced by the government of nigeria to enhance. V1 lfn 2004 as updated to may 2007 that requires all companies to file returns in prescribed forms. A vat is an indirect tax, in that the tax is collected from. Vat was proposed and a committee was set up to carry out. The drop in oil prices, which has led to dwindling revenues for government in nigeria, has once again brought into. Vat has a directorate within the frame work of the federal inland revenue services firs with the head office in abuja. Nasiru ibrahim arab, clerk to the national assembly. Azubike1 michael okpara university of agriculture umudike umuahia abia state nigeria. Computer science and engineering final year complete projects and materials, computer science final year complete project project topics on web design. 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.
This paper examined tax reforms in nigeria with respect to value added tax. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. The importance, how to, effect causes relationship, comparison, history, role, solutions are discussed. There shall be exempt from the tax the goods and services listed in. This act may be cited as the value added tax amendment act, 2007. Value added tax and economic development in nigeria. A valueadded tax vat, known in some countries as a goods and services tax gst, is a type of tax that is assessed incrementally. The value added tax act originally consisted o f 42 sections and three schedules. 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 by the vat act and the firs information circular no 200702. How important is the value added tax to the nigeria economy. 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. 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. Additional investment allowance of 15% of the tax free period. Pdf the objective of this study is to determine the extent to which value.
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. They are neither binding on nor create estoppel against the firs. Sep 11, 2014 the net vat in a tax period is the amount to be remitted to the firs. What you need to know about value added tax vat in nigeria. Value added tax vat and price stability in nigeria 54 pages chapter 15 quantity get full work categories. Vat is imposed on the net sales value of nonexempt qualifying goods and services in nigeria okoyeuzu, 20. Value added tax and economic growth in nigeria john chika. Value added tax in nigeria vat all you need to know. This paper attempts to examine the relationship between value added tax and economic development. 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. Only a limited number of supplies are nilrated, meaning any vat suffered may be recredited to the tax payer. 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.
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