Taxes in modern economics are the most important source of government revenue. The are compulsory levies that are regularly imposed, and as a rule, not designated for a special purpose they are regarded as a contribution to the general revenue pool from which most government expenditure are financed.

       Taxation occupies a principal position in the Nigerian economy as in other countries. Value – Added –Tax was introduced in Nigeria currently to replace the old sales tax. The old sales tax, has been in operation under the federal government legislated decree No 7 of 1986, but it is operated on the basis of residence

   However , the newly introduced value added tax is operated under the federal government legislated decree No 102 of July 1993. VAT  is a form of indirect tax whose burden is shifted from the manufacturers through the distribution channels to the final consumer who then bears the final burden

    Value added tax came into effect on 1st January 1994 the tax is a tax on consumption. VAT is a multi stage tax which is impose on goods and services as they pass through the various stages in the business chain. From manufacturing, importation through wholesales to relating.  The payment is borne by the final consumer because it is included n the selling price ,it’s administration involves a credit mechanism system whereby a taxable person who is charged tax on the supplies to his entitled to set off that tax against the tax charged by him is supply to other persons , this making him only accountable for the excess of the tax on the supplies from him over the tax on the supplies to him.

       The tax paid or payable by a taxable person on the importation of a business carried on by him is known as his ‘input tax’ while the tax paid on the supplies made by him  is known as his ‘out put tax’. The VAT payable in essence is the output tax , less input tax.

       The tax on the supply of goods or services is chargeable only where:-

n  The supply is a taxable supply and

n  The goods and services are supplied by a taxable person in the course of a business carried on by him and is payable by the person supplying the goods and services .    

  VAT in Nigeria is computed at a flat rate of 5% of the price of the goods and services. This is affected on behalf of the government by business and organization that have registered for VAT purpose . VAT is operated by over ,sixty countries including some countries on the west of Africa .

   In Nigeria , two agencies of the muted nations organization the international monetary fund [IMP] and the world bank which are closely identified with the establishment and monitoring of the structural Adjustment programme [SAP] had since 1987 been advising that the Nigeria tax system need to be reformed so that the government  will be  less dependant on the petroleum revenue  generation .

   In an attempt  to effect this reformation of tax system , the federal government set up two tax study groups in 1991 . The federal ministry of finance and economies development set up one study group to study and make recommendation on the reforms needed in direct taxes in Nigeria . The federal ministry of budget and planning set up another study group which   is more relevant to our study on indirect taxes and inaugurated on 26th April in 1991 with the objectives of among other to :

-Shift  taxation towards consumption rather than saving .

-         Improve the administration of indirect taxes.

-         Provide incentives for export production.

-         Maintain a fairly ever tax incidence.

-         Reduce dependence on oil revenue.

        The general guideline for the establishment of value added tax in Nigeria was given by this committee . value Added tax was introduced into Nigeria economy tax  system in January 1st  , 1994 ,following the elegant provision of decree No .102 of July , 1993 but it has been in operation in other countries before it was  introduced in Nigeria .

     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

      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 .

     The final cousumers of these vat able goods and service bear the burden of the tax . AS a result the project topic which form the  center of the study that is the implications of VAT on the payers .

1.1                                   STATEMENT OF THE PROBLEM

             Much as it is known that VAT will increase the revenue base of Nigeria , it cannot be free from some problem . In view of the compulsory nature of and strong aversion of tax [VAT] payment effects must be constitute  made to make any tax system as attractive and as conveniently as possible . 

   This can be achieved by regularly evaluating the tax system with a known set  of criteria  modified to suit the pervading circumstance of time .

      The Question which this reseach work aims at answering could be summarized into  the following problem statement :

1Corporate performance could be improved upon under  the value added tax. How realistic is this assumption ?

2       Given the percent economic situation and industry condition , how are individual / companies dealing on goods and services which  are  subject to VAT  , going to the affected by this tax system.

3       With the apparent difficulty encountered by firms in holding down costs, and give the incentives in VAT accruing to firm operating at minimal costs, have a company’s pricing policy most likely to be affected. 

           Industrialists, manufacturers , distributors , individuals and organization have not accept VAT ,they are the opinion that VAT is not good for a developing country like Nigeria. The problems  of enforceability has to be tackle by employing honest and truthful personnel who will enforce the payment of VAT so levied severe penalties has to be adopted so as to enforce  payment by VAT defaulters.


  The purpose of the study is find out the extent to which the tax in investigation , VAT will imply to the tax payers and final consumers. Thus the study is designed to investigate the implication which value added tax will have on the tax payers , that is the relationship between the tax and those paying it in the Nigerian context of tax system.


This work is of academic significance in the sense that it will contribute to the understanding of the Value Added Tax  and it’s implication on tax payers. The practical significance lies on the fact that the work would highlight the extent to which tax payers could take advantage of the opportunities in the tax system to improve their standard of living even of greater importance is the potential of this study in throwing more light on the unintended adverse effects of the tax on some industries


  Hypotheses 1  

Ho : VAT is tax based on  consumption of goods and services .

H1 : VAT is not tax based on  consumption of goods and services .

Hypotheses 2

 Ho :there are effect on the price of variable goods and services 

H1 :there is no effect on the price of variable goods and services


       This is the scope of the study that works out aspects of the study to concentrate efforts upon.

       Though the study is supposed to be carried out on the variable persons and establishments in the thirty six (36) states of Nigeria and the federal capital territory, Abuja , the study due to financial cost of transportation and time limit is concentrated only on the tax payers in Enugu state.

    In this state not all payers will concentrate but rather few selected was based in Enugu urban will be concentrated.

          The implication on the tax payers investigated however will be taken to be applicable to all the tax payers in the state and all over the country.


    There are certain  complex and unfamiliar technical  terms which needs to be clearly defined as regards their usage , applied to this study for easy understanding , there  are explained in a way as to make their contextual usage   clear to the reader.

i)                   VAT : This  is a tax of the supply of goods and services which is eventually borne by the final consumer , both collected at each stages of production and distribution chain.

ii)                VARIABLE GOODS\SREVICES: These are goods or services that subject to VAT. There are list of these goods and services in the appendix

iii)                 VARIABLE PERSON: These are business organization that are registered for VAT purpose , the firms collect VAT from the customers and rant to the Vat secretarials.

iv)              TAXABLE  PERIOD : This is the period covered by any particular return. In Nigeria the taxable period is one month , in other words the returns and payment are normally made monthly  to the local VAT office  on or before the 14th day of the month next following that in which the supply was made.

v)                TAX INVOICE : This is the key to any credit claim on VAT.   Whenever a person supplies a variable tax invoice in support of the transaction and take a copy for himself

vi)              OUTPUT TAX: These are taxes paid by variable  persons on the supplies he made.

vii)           INPUT TAX: These are those VAT paid by the customers and collected by the variable persons.

viii)         ZERO RATED GOODS: These are goods that attract a VAT rate of 0% while the normal rate of VAT in Nigeria is 5% for all goods and services variable

ix)              CHI-SQUARE: This is the statistical techniques used in testing the hypothesis concerning the difference between a set of observed frequencies of a sample and a corresponding set of expected frequencies

x)                DEGREE OF FREEDOM: This is the range within which the hypothesis is to be tested.

xi)              CONFIDENCE LEVEL: The level of limit within which we may be confident that the population means lies.

xii)           TAX INCIDENCE: This is the final person(s) who bear the tax burden.

xiii)         NIGERIA ECONOMY: This is the aggregate output of Nigeria as a whole.

xiv)         TAX SYSTEM: This is the way tax is being regulated and administered

xv)           SALES TAX: This is the tax imposed on the sales of a commendation usually collected at wholesales or retail stages.

project topics   project topics and materials 


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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper

    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

    This chapter explains the different methods to be used in the research project. Here you mention the procedures and strategies you will employ in the study such as research design, study design in research, research area (area of the study), the population of the study, etc. You also tell the reader your research design methods, why you chose a particular method, method of analysis, how you planned to analyze your data.

    Your methodology should be written in a simple language such that other researchers can follow the method and arrive at the same conclusion or findings.

    You can choose a survey design when you want to survey a particular location or behavior by administering instruments such as structured questionnaires, interviews, or experimental; if you intend manipulating some variables.

    The purpose of chapter three (research methodology) is to give an experienced investigator enough information to replicate the study. Some supervisors do not understand this and require students to write what is in effect, a textbook.

    A research design is used to structure the research and to show how all of the major parts of the research project, including the sample, measures, and methods of assignment, work together to address the central research questions in the study. The chapter three should begin with a paragraph reiterating the purpose of research. It is very important that before choosing design methods try and ask yourself the following questions: Will I generate enough information that will help me to solve the research problem by adopting this method?

    Method vs Methodology

    I think the most appropriate in methods versus methodology is to think in terms of their inter-connectedness and relationship between both. You should not beging thinking so much about research methods without thinking of developing a research methodology.

    Metodologia or methodology is the consideration of your research objectives and the most effective method and approach to meet those objectives. That is to say that methodology in research paper is the first step in planning a research project work.

    Design Methodology: Methodological Approach

    Example of methodology in research paper, you are attempting to identify the influence of personality on a road accident, you may wish to look at different personality types, you may also look at accident records from the FRSC, you may also wish to look at the personality of drivers that are accident victims, once you adopt this method, you are already doing a survey, and that becomes your metodologia or methodology.

    Your methodology should aim to provide you with the information to allow you to come to some conclusions about the personalities that are susceptible to a road accident or those personality types that are likely to have a road accident.

    The following subjects may or may not be in the order required by a particular institution of higher education, but all of the subjects constitute a defensible in metodologia or methodology chapter.

    Click here to complete this article - How To Write Chapter Three Of Your Research Project (Research Methodology)


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