Thesis Abstract

This project is an attempt to analyze and evaluate the level of success made in the implementation and management of Value Added Tax. (VAT) was introduced in Nigeria was seen by, many as another fixed policy that may not succeed. In the contrary, this notion was proved wrong by the success of the Federal Board of Inland Revenue Services in the administration of VAT. Under the Federal Board of Inland Revenue Services, there exist a VAT directorate responsible for the management and implementation of VAT in our country Nigeria. This piece of work focused on the strategies adopted by the Federal Board of Inland Revenue Services facilitates payment by the taxable individuals. A touch is also made on the analysis and comparison of VAT with other forms of tax in Nigeria to prove its viability. Finally, the work treated the contributions of VAT to Federal, State and local government revenue and their expectations.

Thesis Overview

1. INTRODUCTION

Taxation
in every sense is a tool of economic reformation. Government, the work over, have always found
ways of imposing various levies on their subjects. This is done with a view for raising revenue
for its expenditure.

In
Nigeria,
some of the type of taxation Include personal Income tax, Capital gain tax,
Capital transfer tax, sales tax, petroleum tax and Withholding tax.

Value
added tax as a form of tax was introduced in Nigeria on December IST 1993. Though the operational date was 1st January 1994. VAT is a tax charged on the consumption of
goods and service locally or imported into the country since then; many
countries have adopted this tax policy as it has proved successful in its implementation. In Africa, up to 17 countries including Nigeria
adopted VAT and over sixty Countries in the World operated VAT since its
inceptions. The trend has kept on
growing as many countries are turning toward VAT as a remedy for the other
unsuccessful form of taxes, even though Nigeria joined the league of
countries operating VAT just of 1994. She has very unique attributes in the
operation of this new tax policy. Nigeria
charges a single rate of 5% unlike most of other countries which charge
multiple high rates.

Value
Added Tax (VAT) in Nigeria
is Federal Government Tax which is central administered using the existing
machinery of the Federal Inland Revenue Service (FIRS). Value Added Tax has a directorate within
frame-work of the FIRS with the head of office in Abuja.
It was this group that proposed VAT and in that direction, a committee
was set up to conduct studies on the implementation of VAT.

VAT replaced the sales tax whose base is regarded as narrow and which covers only nine categories of goods plus sales and service in registered hotels, Motels, and similar establishment. In contrast, VAT base is broader and include most professional services and banking transactions which are high profit generating sectors. The revenue generated from VAT is shared among the three tiers of government, the Federal, state and Local government. When the tax system was first implemented in 1994, the state government received 50% of the proceeds. While 20% went to Federal government for covering its administration cost. In 1996, the distribution of the revenue generated from VAT was further shared as follows: Federal government 35%, state government 40% and the local government 25% in 1997, the distribution formular was the same as in the 1996 distribution formula. It was further changed as follows:

Federal Government 15%, State government 50% and Local government 35%, the 2000 distribution formula is Federal government 15%, state government 50% and local government 35%.