THE ADVANTAGE OF VALUE ADDED TAX IT ERMS OF REVENUE GENERATION - DOC

							                              TABLE OF CONTENT



Title page

Dedication

Acknowledgement

Abstract

Table of content



CHAPTER ONE:

1.1   Statement of problems

1.2   Objective of study

1.3   Significance of study

1.4   Statement of the hypothesis

1.5   Scope of the study

1.6   Limitations of this study

1.7   Definition of terms




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CHAPTER TWO:

2.1   Review related to literature

2.2   Definition

2.3   The nature of vat and the administration policy

2.4   Adaptation of vat in Nigeria

2.4   Vat as a replacement of sole tax

2.6   Implementation of vat in Nigeria

2.7   Legislation of vat




CHAPTER THREE:

3.1   Research methodology

3.2   Source of data

3.2   Method of data collection

3.3   Method of data analysis

3.4   Justification of methods




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CHAPTER FOUR

4.1   Data presentation and analysis

4.2   Test of hypothesis

4.3   Data analysis

4.4   Data interpretation



CHAPTER FIVE:

5.1   Summaries, conclusion and recommendation

5.2   Findings

5.3   Conclusion

5.4   Biography

5.5   Questionnaires and appendix




                               CHAPTER ONE



INTRODUCTION

      Some years back, the agricultural sector was playing an important role in

the Nigeria economy both in generating revenue and in the physical impact. This



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was before oil started its own impact on the economy. The impact created by the

oil sector begging to be more relevant within a short period of time. Other sectors

of the economy become secondary in terms of their relevance’s. The sectors were

neglected in the favour of oil.

      Oil thus becomes the leading factor and the leading product in term of

revenue generating and foreign exchange contribution. The condition of the

economy became vulnerable to the condition of the word oil market form 1970 till

date. The fluctuation of price in the world of oil market in the Nigeria economy.

This is by diversifying the revenue generated based on the higher economy.

      In addition to the above mention situation, the Nigeria state was increasingly

acquires ring national responsibilities along with the traditional role of the

government. The financial requirement of the government has been increased over

the years in facilitating the accomplishment of government functions. Worthy of

mention is this connection in the effective way of revenue generation and

collection by the government against responsible for the task. The idea of

introducing value added tax (VAT) was therefore considered and the federal

government finally approved its introduction. Value added tax is therefore

expected to increase and be effective, contribute towards enhancing the revenue




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generation based on the government. The system is expected to minis of eliminate

the corrupt practices associated with revenue assessment and collection.

The important of revenue in any country and of course Nigeria cannot be

overemphasized. Revenue has been the bedrock of government performance. The

history of revenue in Nigeria dated to the pre-colonial era when tax and levies were

paid to the fathers or lord as the case may be to Oba’s, Kings, Emirs. The tax or

levies were to be paid in cash or in kind during the pre-colonial era. It was used to

support the sustenance of the colonial administration. It has even been used to

mobilize farmers into cash crop production mainly for the colonial export through

the use of the cash taxes. Even after independency, tax has played in important role

in generating revenue for the government.

      It as used for the running of the affairs of the post independence government

in Nigeria.

Furthermore, it has also been used to archive other policies such as the protection

of the infant industries, income re-distribution, checking and controlling the

consumption of some certain goods. Etc. it is therefore very much likely that it will

continue to play a very important role in Nigeria economy.

      Following the difficulties. Irregularities, complains associated with the

assessment and collection of the said tax, operation committee was set up by the




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federal government in 1991 to review the entire tax system in operation. The

committee recommended the idea of introducing value added tax (VAT) in the

country and another committee was set up to undertake the feasibility study and

make recommendation on its implementation after which he federal government

finally approved the introduction of value added tax in Nigeria tax system with

effect from 1st September 1993 and was incorporated in the 1994 budget.



STATEMENT OF PROBLEM

      This research is made to find out the position of value added tax on the

overall Nigeria on taxation system. It is the find out the impact or role both in

terms of generating revenue for the government and controlling irregularities

wildly believed to be associated with the said tax. It is also set to find out beyond

Techniquecal level practical problems associated with it and to make

recommendation at the end of the study.



OBJECTIVE OF THE STUDY

      The objective of this study is to examine the introduction of the value added

tax (VAT) as a system of taxation in Nigeria and also to look at the relationship

between Value Added Tax and generation of revenue through other forms of




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taxations. It is also the objective of this study to find out the problem associated

with the administration of VAT since its introduction and also to give

recommendation on how o make VAT very effective and responsible to the need of

the Nigerians. The study also intends to find out the advantages of Value Added

Tax (VAT) in term of generating revenue in Enugu state.



SIGNIFICANCE OF THE STUDY

      The significance o the study is that government is in need of money to

execute its increasing projects. Having introduced VAT to replace the sole

taxation, to escape the all the difficulties in the old system. The study is aimed at

enhancing the effective implementation and achievement of the objective, as such;

VAT should be regarded as worth and should be encouraged and supported.

      This study is very important, as the value added tax is a new or a modified

system, which has a lot of significance. The public needs to be educated on its

operation. The study will bring the outstanding between the government, the

populaces (the tax payer) and the tax authorities together

      Proper knowledge of the Values Added Tax would bring increase return to

the government as a result of the compliance by the payer and proper record

keeping by the officials.




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STATEMENT OF THE HYPOTHESIS

      A hypothesis is an arrangement or tentative generated, which can be proved

with empirical evidence. There are two type of hypothesis namely;



Null hypothesis and alternative hypothesis



A null hypothesis is a hypothesis of no effect or no difference while an alternative

is a hypothesis that may be accepted if the statically evidence is rejected by the

sample evidence.

      Data are collected, analyze and interpreted with a view to accepting or

rejecting hypothesis. The data collected from this research will be federal Inland

Revenue service Enugu office.

We have the hypothesis as follows;

Ho: the measures taking by the federal Inland Revenue service (FIRS) to curtail

      the much pronounce Nigeria factor of competition and irregularities has nor

      been archived




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Ha: the measure taking by the federal inland revenue service (FIRS) to curtail the

      much pronounce Nigeria factor of competition and irregularities has been

      archived



Ho: Proper planning assessment, collection and monitoring of the value added tax

      has not been archived



Ha: Proper planning assessment, collection and monitoring of the value added tax

      has been archived.



Ho: the steps government has taking to compel all cooperate bodies border and

      business in it to fully register with VAT department has been attained.




SCOPE OF THE STUDY

      The scope of the study is to cover the introduction, the implementation,

problem and prospect of VAT and its relationship with revenue generation in

Enugu state. The line frame will cover from its introduction in 1993 till date. In




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addition to this all data and information to be used will be from area office of the

federal Inland Revenue service Enugu office.



LIMITATIONS OF THE STUDY

      The study is concentrated on the advantage of value added tax (VAT) in

terms of revenue generation and its operation in federal inland service Enugu

office value added tax (VAT) as a new introduced system of tax. The study was

faced with a problem of its own which limited the research system. Some of the

limitation is as follows;

       Non-availability of books and journals etc. doe to lack of relevant textbook,

journals and magazine, the other relevant articles or publication on the subject

matter through which one could easily collect his materials for the literature review

in this research work.

b) Its newness:

  Due the newness of the value added tax VAT, the taxpayers, the revenue

      officials are yet to understand fully this new system of tax. This were

      experience in the course of the study when people were interviewed and

      their response were similar which reflect lack of understanding.




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c) The effect of scanty data:

    The issue of scanty data arose were some private organization refuse to

      disclose some information on their record keeping on Vat and especially on

      returns rendered to the federal government. This made it very difficult to get

      the required information on VAT operation by the organization in respect to

      credit system of VAT



d) Time:

     Due top shortage of time, the study was carried out in Enugu state only. Time

      did not allow for wilder research in other state of the federation. It was not

      easy to collect most of the questionnaire distributed due to the fact that the

      people who the questionnaire were given never got it ready at the

      appropriate time. They gave appointment foe it to be collected. Some even

      said that they missed the questionnaire.

e) Interviews:

    The interview with the sole trader was not easy to obtained because it was

      very difficult to make them understand the purpose of he study is not to

      bring them to book for tax purpose.




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f) Unwillingness:

        Another problem or difficulties face with the course of this research is

          unwillingness of businessmen and people in position of such vital

          information to release them and some of then see the researcher as spies or

          agent of tax board or authority.



DEFINITION OF TERMS

The terms use in this study on the important of value tax are define as follows;

   i.        Value Added Tax: this is the tax impose on the value of goods and

             services in the country either imported or exported which the surlier or

             the sellers of the goods add to it.

   ii.       Economy: this means control and management of money                goods

             and services in a country.

   iii.      Goods: the term goods cover all tangible and intangible assets

             and commodities that are traded for considerations.

   iv.       Supply of goods: this include delivery and transfer of goods       arising

             from contractual or legal action or transaction though agents.

   v.        F.I.R.S: Federal Inland Revenue service, it the operation of federal board

             of Inland Revenue.




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vi.          F.B.I.R: the means federal board of Inland Revenue.

      vii.   Legislation: this deal with the aspect of making laws in the system of

             tax.

      viii. VAT on input: this is the VAT on the purchase of goods and service on

             a notable person.

      ix.    VAT on OUTPUT: this is the VAT charged on the sale of goods and

             services it is the VAT paid to the F.I.R.S after vat on the purchase of such

             good or supply has been deducted.

      x.     Vatable person: this means any person co-operate or incorporate who

             trade in Vatable goods and service for a consideration.



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