An Evaluation of Tax Payers Preception on the Value Added Tax in Nigeria

An Evaluation of Tax Payers Preception on the Value Added Tax in Nigeria


An Evaluation of Tax Payers Preception on the Value Added Tax in Nigeria


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Abstract on An Evaluation of Tax Payers Preception on the Value Added Tax in Nigeria

This work was aimed at evaluating tax payers perception on value added tax system in Nigeria.

In 1993 the Federal Government promulgated a Decree in respect of the introduction of VAT, which is a tax on the consumption of goods and services. This was in view of the numerous benefits, which could be derived from the exercise.

Prior to the introduction of VAT sales, tax system was in operation but tax experts see it as being too narrow and also unable to generate the expected revenue for the government. This also led to the need for an alternative tax system VAT.

However all the above are the views of all government the research finds it necessary to evaluate the opinions of tax payers who are the incidence bearers of VAT in order to make a comparative analysis with the opinions of the government. Three samples were used in this study namely; consumers, producers and tax official. The  two hypothesis  test where all in favour of  VAT proving that VAT is a fair and  equitable system and it is  perceived to  favour tax payers.

In order to enhance the performance of the VAT system, the researcher made some recommendations to the Federal Government.    


Chapter One of An Evaluation of Tax Payers Preception on the Value Added Tax in Nigeria


Taxation has long been practice in Nigeria. Initially, only men were expected to pay taxes but now all people working and anybody found in the capacity of paying tax are obligated to pay tax.

          Tax in a mandatory levy on income charged for the purpose of carrying out government activities losses incurred by government in recent times through tax evasion are increasing rapidly despite the pathetic financial and economic state of the country. There are daily report on newspaper and magazines that government losses billions of naira yearly due to tax evasion and the fraudulent practices of the tax officials. This has attributed to many factors. Most people attribute this to the fact that the country’s tax system  in highly  income base and since income is taxed only at one point or stage, a lot of evasion results.

          In Nigeria, many different goods are consumed. For this reason, tax experts see consumption as the actual habit and as such, the need to shift tax base from income tax to consumption tax. This necessitated the introduction of sales tax in Nigeria through degree N0. 7 of 1986.

          However, it was discovered that sales tax is narrow because it does not cover a lot of goods and services. This prompted the introduction of Value Added Tax (VAT) in Nigeria.

          The idea of introducing VAT in Nigeria came from the report of the study group set up by the Federal Government in 1991 to review the entire tax system, VAT was proposed and a committee was set up to carryout feasibility studies on its implementation. In January 1993, government agreed to introduce VAT through instrumentality of the VAT Degree 102 of 1993. This was meant to be effective from January 1 1994. It came on stream as a replacement to its antecedent, the sales tax, which was characterized by a lot of lapses inadequacies and restrictive coverage. VAT is a consumption tax imported on all manufactured goods, industrial raw material and other imported into or product in Nigeria a single rate of five percent. Potentially, its draguel cover virtually everybody, since one thing or the other except in the cases of specific items that are exempted. 

Several benefits which the government expected to derive from value added tax (VAT) were enumerated. During several others they are

i.        Increase in revenue generation

ii.       Facilitation of administrative enforcement




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