The purpose of this project is to determine to identify strategies for administrative implementation of the variables amongst others. Also to identify and appraise administration of VAT in Nigeria, highlight the loopholes and suggest solution.

From the research carried out, the stuffy reveals that Value Added Tax is an important element in the life of any nation and also that the revenue generated by the government is not only beneficial to them as so many Nigerians thinks but also to the people as it is been used for the effective administration of the country. The research also reveals that the payment of value added tax dues by so many people is always seen with hatred and as much, the practice of tax evasion and avoidance have a negative effect on tax generation.

Finally, the study reveals that if more revenue can be generated through taxation, it will lead to an effective administration by the government putting into consideration a true government who is ready to serve the people.

Above all this research work recommends that in order for an efficient and effective tax generation and administration, the government should try to put in place provision of more staffs and good welfare for them so as to perform their jobs effectively. It also recommends that a good habit of administration should be inculcated by the government in order to gear the citizens to pay tax.



Title page                                        i

Certification                                    ii

Dedication                                        iii

Acknowledgement                                iv

Abstract                                        vi

Table of contents                                vii


1.1    Introduction                                1

1.2    Objectives of study                            2

1.3    Relevance of study                            3

1.4    Significance of study                            4

1.5    Scope of study                                5

1.6    Statement of problem                             5

1.7    Research hypotheses                            6

1.8    research question                            7

1.9    Limitation of the study                         7 



2.1    Introduction                                8

2.2    Conceptual clarification of taxation                11

2.3    Elements of effective administration of VAT            30

2.4    Productivity in revenue collection                    30



3.0    Introduction                                50

3.1    Research design                                50

3.1.1    Types of research method                         51

3.2    Population of the study                         51

3.3    Data collection instrument                        51

3.4    Validation of an instrument                        51   

3.5    Reliability of the Instrument                     52



4.1    Introduction                                53

4.2    Data Analysis                                56

4.3    Formation of model                            56

4.4    Specification of Model                            58

4.5    Analysis of the estimated models                    66



5.1    Summary                                    71

5.2    Findings                                    72

5.3.    Recommendations                             77

5.4    Conclusion                                    86



For a country to exist in harmony, the government of such country must live up to its public economic and social obligation by providing economic and social amenities reduced or subsidized commercial rate.

To do so, this will normally involve huge expenditure and therefore, will also require revenue source.

Additionally, government at various levels will need to settle operational costs to be able to offer the aforementioned social amenities; one of the various sources of fund available to any government for revenue is Taxation. This could either be in form of direct or indirect tax or both.

Ojo (1998) described taxation as “the concept and the science of imposing tax on the citizen”.

Summerfield (1986) described Revenue as referring to a monetary quality earning to a monetary quality during a given time period regardless of the amount collected.

One of the forms of indirect tax is Value Added Tax (VAT) hereafter referred to VAT.

The introduction of VAT in Nigeria virtue of Decree No 102 of 1993 which took effect from 1st January 1994 mark the phasing out of the Sales Tax which has been in force since 1986 by virtue of the ales Decree No 7 of 1986.

VAT was adopted in Nigeria because the federal as well as the state government need additional resources for development. This revenue can only come from increase in taxation and productive effort. The need of the government for more revenue cannot e over-emphasized particularly as revenue from crude oil which is the most important source of oil in the international market continues to influence, making it necessary for government to explore pother source of review.

Similarly, revenue available from oil and present non-oil sources mainly conventional and traditional taxes were not sufficient to meet public needs, as expenditure continue to rise in an era of increased socio and economic problems, particularly the pressure from population.


The purpose of embarking on these research works are:

1.    To collect addition on the subject and develop a mechanism for improving on existing level of knowledge and

2.    To identify strategies for administrative implementation of the variables amongst others.

a.    Identify and appraise administration of VAT in Nigeria, highlight the loopholes and suggest solution.

b.    Highlight the effect of VAT on revenue generation of the country.

c.    To consolidate and modernize the tax system n order to provide a basis for strong revenue growth and flexible fiscal management.

d.    To provide incentives for export production

e.    To distribute the burden of taxation more evenly across different goods and services through a broader coverage, so as to avoid multiple taxation.

f.    Identify problems faced by VAT administrator and how they can be abated.

g.    Suggest ways of making the operation and administration of VAT better than what it is now.

h.    To develop an approach to reduce the consumption of luxuries and curb the increase in the consumption of non-essential. The approach by implication would tax non-consumption goods relatively higher and minimize impact on essential goods and services used by low income earners and formulate a program of work for the accomplishment of the assignment.


The principal reasons that prompted the introduction an implementation of VAT I Nigeria are enumerated under the historical background of VAT in Nigeria. VAT was set out to meet some targets, according to E.I. Ijewere, chairman Modified VAT (MVAT) committee. VAT is a tax imposed on value, which the supplier or tax seller of a goods or services adds to the public sectors.

In addition, the information circular 9304 of the FIRS advanced some reasons justifying the replacement of sales tax with the Value Added Tax rationales put forward by FIRS are as follows:

1.    VAT is equipped to ensure voluntary compliance because of the multistage collection and credit mechanism involved.

2.    Tax collection at the point of importation is easier under VAT than under sales tax where the imported goods are levied at the point of retail after leaving the ports.

3.    VAT has higher revenue yielding potential than the retail sales tax.

4.    VAT is inherently more comprehensive because it is better equipped to tax services than the sales tax.

5.    The use of invoice under VAT provides self-police mechanism, as VAT payers demands invoice so that they can make valid credit or refund claims

6.    The use of invoices creates a well-defined audit trail, which the tax authority can follow.

It is also easier to integrate VAT audit with some tax audit since VAT is comprehensive and restricted to the retail stage as the sales tax.

This study would serve as a research work that would further enlighten the level of subject scope especially vatable resource on the importance and usefulness of VAT.


Taxation is a vehicle of economic and administrative development in an economy and VAT has provided to be a very useful tool of economic and fiscal measure in Nigeria. If VAT system is improved, it will be a great boost to the government revenue and the economy at large.

The study will provide explanation and reasons for introduction of VAT in Nigeria it will identify differences in the administration and implementation of VAT, it will offer suggestion to problems faced by the administrators.


1.    Examination of the effect of Value Added Tax on final consumer, companies involved and the economy as a whole.

2.    Interviewing, questionnaire as well as a literature review.

3.    Suggestion of strategies for successful implementation of Value Added Tax.

4.    List of product, service and companies affected by the policy of Value Added Tax.


The introduction of Value Added Tax (VAT) requires a lot of preparation and enlightenment on part of government because of complexity of the tax and the need for co-operation of taxpayers. However the followings are the major problems confronting the implementation, registration and collection of VAT in Nigeria.

i.    Lack of proper education on the subject matter

ii.    Inadequate of records kept by businesses.

iii.    Inadequate preparation and lack of understanding of how VAT works and what government intends to do with the revenue tends to make the tax unpopular.

iv.    Increase in the price of goods and services that can result in inflation, growing unemployment and under-utilization of industrial capacity.

v.    Lack of confidence in the capacity of government judiciously allocated fiscal resources.


Five hypotheses will be tested to show the level of significance of estimated parameters and the suitability or otherwise of formulated models.

The various hypotheses are:

1.    H0: That Value Added Tax administration and implementation has no significant effect in government source of revenue.

    H1: That Value Added Tax administration and implement has significant effect in government source of revenue.

2.    H0:  That Value Added Taxation in Nigeria does not constitute double taxation on goods and services.

    H1: That Value Added Tax double taxation on goods and services.

3.    H0: That the incidence of state creation in Nigeria cannot positively affect the realization and administration of Value Added Tax (VAT).

H1: That the incidence of state creation in Nigeria can positively affect the realization and administration of Value Added Tax.

4.    H0: That there is no relationship between appraisal of the effectiveness on VAT and Gross Domestic Product.

H1: That there is relationship between appraisal of the effectiveness on VAT and Gross Domestic Product.

5.    H0: That Value Added Taxation should be abolished.

H1: That Value Added Taxation should not be abolished in Nigeria.


In the course of this study, some questions came under consideration, these questions include:

1.    How effective is the administration of VAT system in Nigeria?

2.    What are the effects of Value Added Tax on economy?

3.    Does VAT not constitute double taxation on consumers?

4.    What benefits accrue to tax payer?

5.    What steps can be taken to ensure that the full potentials of VAT are realized?

6.    What are the likely prospects of VAT?

7.    How does VAT influence consumer behaviour?


It is obvious that hardly can there be any administrative research work like this, without limitations, has monopoly of knowledge, and the facts that human beings are rational. Since, the material for carrying out this research work may not provide conclusion answers to all the issues relating to administrative level of operation.

Difficulties in getting relevant information, textbooks and relevant journals to the studies are another inhibits factor. The available time and financial resources also contributed but not significantly to the limitations of this research and therefore, this inquiry many not exhaust all that is necessary for maximum exposure.

This however, leaves room for other researchers whom may want to investigate further.



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