PROBLEMS IN ADMINISTRATION OF VAT IN NIGERIA
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PROBLEMS IN ADMINISTRATION OF VAT IN NIGERIA
ABSTRACT OF THE PROBLEMS IN ADMINISTRATION OF VAT IN NIGERIA
The researcher’s goal in this study is to discover the issues with VAT administration in Nigeria, as VAT is one of the key sources of government revenue. To accomplish this, the researcher discovered that the following were some of the issues impeding VAT administration in Nigeria.
a. The issue of noncompliance in the government services industries.
b. Failure of some states, such as Sharia states, to comply by rejecting the payment of VAT on alcohol.
c. Inadequate Value Added Tax VAT is properly regulated by Zonal Offices around the country.
To address these issues, certain hypotheses were developed to serve as guides during the study process. In chapter two of the work, the researcher conducted a literature review and made several references to link the topic of VAT administration in Nigeria.
The researcher then employed hypothesis, data collection method, data sources, and data location to acquire the essential information for chapter three of the study.
The researcher presented and analysed the data obtained in chapter four. This chapter also thoroughly tested the hypotheses that were advanced.
Finally, in Chapter 5, the researcher summarised the findings from the data obtained. And finally resolved to reach a reasonable conclusion before suggesting.
INTRODUCTION TO CHAPTER ONE OF THE VAT ADMINISTRATION PROBLEMS IN NIGERIA
1.1 STATEMENT OF THE PROBLEM AND THE PURPOSE OF THE STUDY
Tax has been the primary source of revenue in Nigeria from time immemorial, but when we consider the efficiency and efficacy of the taxation system, we can easily see that tax has encountered a lot of challenges in Nigeria, particularly in the areas of tax evasion and avoidance.
Because of this problem militating against the Nigerian tax system and problems particular to VAT administration policy, the federal government established a study committee led by Sylvester Ugo in 1991 to advocate the adoption
of VAT in Nigeria. A modified Value Added Tax committee chaired by TAE B.I. Ijewere was also formed in 1992 to do a feasibility study on the implementation of VAT and how to solve the situation in Nigeria.
What I want to look at is the problem with VAT management in Nigeria. Why is VAT so difficult to manage in the Nigerian economy? They are as follows:
1. Determine the extent of coverage throughout the country.
2. Make recommendations on how VAT should be administered throughout the country.
3. Emphasise the administration, efficiency, and effectiveness of VAT in Nigeria.
1.2 THE RATIONALE FOR THE STUDY
If this study is successful, it will improve the efficiency with which Vat is administered in Nigeria and will also result in the elimination of all obstacles that impede Vat administration in Nigeria. Furthermore, if this study is successful, more income would be generated via VAT, which will assist to boost Nigeria’s economy.
1.3. SIGNIFICANCE OF THE STUDY
VAT is one of the fiscal policies used by the government to produce cash for population welfare services. The research is important because it helps to explain the various Vat actions and determine the level to which they have been provided.
It also sheds light on the efficiency and efficacy of VAT administration, as well as the benefits of VAT in Nigeria. VAT is a tax on consumer goods and services. It includes a self-assessment method that allows a company to claim credit for taxes paid on inputs such as withholding tax.
1.4 BACKGROUND OF THE STUDY
It is usually assumed that every nation, regardless of its position in the global economy, aims to a main objective and improves the economic well-being of its population under its jurisdiction.
Only economic growth and progress, accompanied by the provision of social amenities, can allow the nation to attain its goal. Because the responsibilities and duties of every government are immense, the question remains as to how the government generates resources to pay their activities.
Because the government is a non-profit organisation by nature, it must earn revenue through taxation and other means. A tax system should stimulate the effective and full utilisation of a country’s production capability while not impeding resource distribution.
It should generate enough revenue to fund whatever government operation is chosen without impeding economic growth and stability.
There are two types of taxes. Taxation, both direct and indirect. It is a type of tax placed directly on or on the property of the person paying the tax under direct taxation. In the case of indirect taxation, the payer is not the same as the person who pays the tax burden.
When taxes are levied on products and services and the burden is shifted to another, most levies are paid from which the Value Added Tax flows. In light of the foregoing, the study committee on indirect taxation recommends the implementation of VAT in 1993 through Vat Decree 102 of 1993.
This Decree went into effect on September 1, 1994. The Value Added Tax (VAT) replaced the sales tax and was implemented to generate additional money from oil. Thus, in the short run, the government can only pay rising public expenditure through taxation, hence the adoption of VAT.
1.5 DEFINITON OF TERMS
VAT, or Value Added Tax, is a tax that is added to the price of products and services. It is levied on goods and services that are consumable. Cigarettes, MTN Rechargeable Cards, and other items that can be subject to VAT are examples.
Administration is the day-to-day operation of the government. It refers to how the government plans, organises, and controls its VAT-related actions in the country.
Fiscal policy refers to a purposeful government policy that is intended to adjust the level of government expenditure or the level of taxation, or both, in order to achieve some desired economic objectives. Budgetary modifications are used to implement fiscal policies.
In this study, the term “problem” refers to all of the variables that work against the administration of the VAT in Nigeria. Things that make VAT administration difficult. Some of the causes that work against VAT in Nigeria are:
the failure of some states, such as the ones shown, to comply, by opposing the payment of VAT on alcohol, and the problem of non-compliance by government service sectors such as NEPA, NPA, and so on.
The relationship between production, trade, and the supply of money in a country is referred to as the economy in this subject. It is also concerned with how to operate a specific country without wasting or spending available resources.
Global: It denotes that something operates all across the world. VAT is administered red everywhere over the world, not only in Nigeria.
Allocation: A sum of money that individuals or governments collect for a certain purpose. Every country has a budget that is allocated to its people.
In Nigeria, for example, the federal, state, and local governments all receive allocations from VAT. The allocation received by the state or local government assists them in improving their economic situation.
Evaluation: To suggest or form an opinion about the value or quality of something after carefully conducting an examination.
For example, in this study, to evaluate means that after conducting research, I will know what VAT is saying and how well it will be administered in Nigeria.
Efficiency refers to how VAT administration in Nigeria should be carried out with minimal expenditure of time and money. How it will significantly enhance the country’s economy.
Hindering: All of the issues that impede the administration of VAT in Nigeria. Some of the causes that make VAT management in Nigeria so onerous include the high prices imposed on products and services.
Economic growth is defined as a quick and continuous increase in real output per person, as well as changes in a society’s technological, economic, and demographic aspects.
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