TABLE OF CONTENT
Table of content
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
2.1 Review related to literature
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
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
4.1 Data presentation and analysis
4.2 Test of hypothesis
4.3 Data analysis
4.4 Data interpretation
5.1 Summaries, conclusion and recommendation
5.5 Questionnaires and appendix
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
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
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
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
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
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.
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
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
Ha: the measure taking by the federal inland revenue service (FIRS) to curtail the
much pronounce Nigeria factor of competition and irregularities has been
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
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.
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
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.
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.
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.
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
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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