The research work is carried out specifically to appreciate value Added Tax as an important source of revenue to the government in Nigeria and its importance to the development of business organisation. The research work analyse the purpose, problems, significance and also the questions relating to the importance of value Added Tax as a source of revenue to the government in Nigeria. In view of this, the research work is discussed under five chapters. Chapter one, focuses on the general introduction of the topic under view, stating the questions and hypothesis. Chapter two deals with the review of the related literature, philosophy and the history of VAT in Nigeria, along with some specific government responsibilities, and also general appraisal of VAT administration in Nigeria, scope, nature and operational character. Chapter three is about research methodology, to see the important of Value Added Tax as a source of revenue to the government in Nigeria, the research design is used, data collection instrument and sampling techniques. Chapter four deals with classification of responses, the information gathered from questionnaires and how such information are tested using hypothesis. Chapter five focused on the summary of findings, conclusion, scope and limitations and finally recommendations..


Title Page    -    -    -    -    -    -    -    -    -   

Approval Page    -    -    -    -    -    -    -    -   

Declaration    -    -    -    -    -    -    -    -   

Dedication    -    -    -    -    -    -    -    -    -   

Acknowledgement    -    -    -    -    -    -    -   

Abstract    -    -    -    -    -    -    -    -    -   

Table of Contents    -    -    -    -    -    -    -   


1.1    Background of the Study    -    -    -    -    -   

1.2    Statement of the Problem    -    -    -    -   

1.3    Objectives of the Study    -    -    -    -    -    -   

1.4    Research Questions    -    -    -    -    -    -   

1.5    Research Hypothesis    -    -    -    -    -    -   

1.6    Significance of the Study    -    -    -    -    -   

1.7    Scope of the Study    -    -    -    -    -    -   

1.8    Limitations of the Study    -    -    -    -    -

1.9    Definition of Terms    -    -    -    -    -    -   


2.1    Introduction    -    -    -    -    -    -    -   

2.2    Theoretical Framework    -    -    -    -    -   

2.3    Conceptual Framework    -    -    -    -    -   

2.4    Empirical Review    -    -    -    -    -    -


3.1    Introduction    -    -    -    -    -    -    -   

3.2    Research Design    -    -    -    -    -    -   

3.3    Population of Study    -    -    -    -    -    -   

3.4    Sample size and Sampling Techniques    -    -    -   

3.5    Method of Data Collection    -    -    -    -    -   

3.6    Research Instrument

3.7    Validity of the Instrument    -    -    -    -    -   

3.8    Reliability of the Instrument    -    -    -    -   

3.9    Sampling Method    -    -    -    -    -    -   


4.1    Introduction    -    -    -    -    -    -    -   

4.2    Data Presentation and Analysis    -    -    -    -   

4.3    Testing Hypothesis    -    -    -    -    -    -   


5.1    Summary    -    -    -    -    -    -    -    -   

5.2    Conclusion    -    -    -    -    -    -    -    -   

5.3    Recommendations    -    -    -    -    -    -   

    References -    -    -    -    -    -    -    -   

Appendix    -    -    -    -    -    -    -    -



          Taxation is an important factor in Economic planning and also an agent for social change. It is perhaps the last to understand and most unappreciated instrument among other government policies by the citizens, yet they expect government to provide some services. This must probably owing to the fact that most people, particularly in developing countries like Nigeria, have very little knowledge of how the machineries of government operate.

          Thus, the taxman is seen by an average Nigeria as a monster always ready to prey on its victims, or a plague that must be avoided at all cost.

          Benjamin Franklin, Philosopher, observed that “in this world nothing is certain but death and taxes.”

          The certainty of taxes have been established long in Nigeria. Before the arrival of the Colonial Masters, Nigeria had been paying taxes in kind by giving farm products to their rulers and rendering free services such as clearing the bush, digging pit toilets, well e.t.c., for the benefits of the community as a whole.

          Income tax was first introduced in Nigeria in 1904 by the Late Lord Lugard, various types of taxes there after come into being through subsequences government.

          Despite the fact that there are other sources government could generate revenue to fashion a society everyone can be proud of.

          Taxes are not new in Nigeria but Value Added Tax (VAT) is the most recent form of tax known to Nigerians.

          The idea of introducing VAT in Nigeria came from the report of the study groups set up the Federal Government in 1991, review the entire fan system VAT was proposed and a committee was set up by carrying out feasibility studies on its implementation. In January 1993, government agreed to introduce VAT by the middle of the year, it was later shifted to 1st September 1993, by which time the relevance legislature (Decree No 102 of 1993) would have been made and proper ground work done. VAT, which replaces sales tax in Nigeria, is administered by the Federal Inland Revenue Services (F.I.R.S) through VAT directorate in close co-operation with the Nigeria custom services (NcS) and the State Inland Revenue Services (S.I.R.S).

          The rationale behind replacing sales tax with the VAT is in formed by a number of factors and consideration notable:

i.        The base of sales tax in Nigeria s operate under Decree No 7 of narrow. It covers only nine categories of goods plus sales and services in Registered hotels, motels and similar establishments. The narrow base of the tax which negated the fundamental principles of consumption tax which by nature is expected to cut across all consumable goods and services, VAT base is border and included most professional services and banking transaction which are profit generating sectors.

ii.       Only locally manufacturer good were aimed by the sales tax Decree 1986, although this might not have been the intention of the law. Vat is neutral in this regard. Under VAT, a considerable part of the tax to be realised is form imported goods. This means that under the new VAT, locally manufactured goods will not be placed at a disadvantages relative to imports.

iii.      Since VAT is based in general consumption behaviour of the people, the expected high yield from it will boost from the payer of the tax. In the light of the foregoing, a seminar of this among the people to the effect that government derives the bulk revenue required for meeting its obligation to the people through taxation.

1.1     Statement of the Problem

          The introduction of Value Added Tax into Nigeria tax system was greatly antagonised by its critics, more and more organisations are being a registered person. Every organisation that trades in goods and services for a consideration is obliged to register with the FIRS VAT Directorate. The registration covers all the business activities of the organisation. The following are some of the problems encountered in the introduction of Value Added Tax:

i.        Inaccurate computation of Value Added Tax figures.

ii.       Incompliance of infant industries with Value Added Tax Directorate.

iii.      Illiteracy of some rural areas about Value Added Tax.

iv.      Lack of information on VAT to new industries.

v.       Incomplete information in the tax invoice of a customer:

          With these problems, the VAT directorate found it rather difficult to balance the final account which provides information to other VAT officials. Therefore, there is need for the introduction of Value Added Tax for the progress of modern business organisation.

1.2     Objective of the Study:

          The broad objectives of this project work are summarised as follows:

To improve the effectiveness of VAT in reducing over dependence on oil sector by the nation To determine the importance of VAT as a source of revenue to the government in Nigeria To ascertain whether the federal Inland Revenue Services can help the profit tempo in the nearest future To rectify the existing lapses in VAT administration so as to minimise the level of tax evasion. To  determine the efficiency of Federal Inland Revenue Services in effective administration of Value Added Tax in Nigeria To ascertain the extent to which VAT can provide revenue to finance basis infrastructure for industrial development

1.3     Significances of the Study:

          This research work would serve as a reference to interested parties that is; student, researcher and so on.

          It would also add to the body of knowledge. This would enhance better understanding of the importance of Value Added Tax as a source of revenue to Government in Nigeria.

          Other corporate or manufacturing organisations, the government and also the individual would understand more about the following:

i.        How VAT has been able to give a desire impact by generating revenue, which is the beginning of reduction of over dependence on oil revenue.

ii.       How to evaluate the work of the F.I.R.S and necessary suggestion about how to keep up with this great achievement in the Nation Fiscal Policy.

1.4     Research Hypothesis

          Hypothesis is a tentative statement about the relationship among variables which is testable.

HO     :         (Null Hypothesis)

HO     :         There is no positive correlation between the operation of Vat                         introduction and its acceptance by the industries.


Hi      :         There is a positive correlation between the operation of VAT                        and its acceptance by the industries.

1.5     Scope of the Study:

          The research for this study has involved definition of the subject matter. Researcher has endeavour to reveal its urgent report, its work among business organisation, benefits it entail and its surrounding.

1.6     Limitation of the Study

          The scope of study is limited by the following:

1.       Availability of accurate data due to inadequacy of most available of data being approximated. And for audited as far as privacy imposed for logistics reasons by the case study in her vital document and in information.

2.       Time Factor: The time for the commencement and completion of this project work allows only for a proper but concise account of the subject matter such as contained in the write ups.

1.9     Conceptual Definition of Key Words

1.       Value Added Tax:  This is defined in the statement of  Standard Account Practice (SSAP) No 5 issued in the United Kingdom in April 11974 “as a tax on the supply of goods and services which is eventually borne by the final consumer collected at each stage of the production and distribution chain.

2.       With Holding Tax: “This is an advance payment of income tax and the purpose is to bring the prospective tax-payer to the tax-net, thereby widering the income tax base.” That is, is used to track down tax payers and the incomes, which may otherwise not be reported by them.

3.       Vatable Person: This is a person who trade on vatable goods and services for a consumption.

4.       Vatable Goods and Services: These terms refer to goods and services that will attract VAT at five percent (5%) on their consumption.

5.       Output Vat: This is the VAT that is due on Vatable supplies. It is derived multiplying the tax value of the aggregate supply by the tax rate.

6.       Input Vat: This is charged on business purchases and expenses according to section 10 2 of Vat Decree 1993. This include good and services supplied in Nigeria or imported.

7.       Vat Account: This is the summary of the output tax in a normal ledger account form.

8.       Zero Rating: This term is used to indicate that the supply of good and services in a taxable supply but that the tax is charged at a zero or nil rate.

9.       Taxable Activity: This includes any activity other than those in the exempted list, conducted as a business, vocation trade and profession.



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