Chapter One
1.0              Introduction                                                     
1.1       Background Of The Study                                           
1.2              Statement Of The Problem                              
1.3              Objectives Of The Problem                             
1.4              Scope And Limitation Of The Study                
1.5              Significant Of The Study                                  
Chapter Two
2.0              Review Of Literature               
2.1       Theoretical Flame Work                                             
2.2              Taxation System In Nigeria                             
2.3              Essentials Of A Good Tax System                               
2.4              Objectives Of Imposing Tax                            
2.5              Vat Revenue Generation                                             
2.6              Important Of Vat To Revenue Generation                  
2.7              Taxable Good And Services And Rates           
2.8              Objectives Of Vat                                            
2.9              Problems Of Vat                                                         
Chapter Three
3.0              Summary, Recommendation And Conclusion
3.1       Summary And Findings                                              
3.2       Recommendations                                                                   
3.3       Conclusion                                                                              
1.0              INTRODUCTION
VAT as a system of revenue generation has been in existence in Nigeria since January 1st 1994. It has recorded remarkable increase in revenue generation for the nation and has been shown by numerous researches to be more effective than the sale tax in revenue generation.
VAT, however, has not achieved all its objectives especially in the University of the Tax. While almost every one buys vatable goods, a lot of institutions, persons and vatable entities has not paid or remitted VAT to the appropriate authorities because they are not registered and the machinery to enforce their registration and the machinery to enforce their registration hampered, inadequate or simply not functioning, hence much revenue accruable from France in 1954 and since then has spread to over 70 countries in the world. It exists in most countries of the EU as well as the European Economic Community such as Germany, Italy, Ireland, Spain, etc. all the DECD countries, Japan, Canada and Michigan state in the USA cooperate VAT.
In Africa, many West African countries and most Francophone countries operate vat. Cote d’ivoire, Togo, Senegal all has vat systems. According to Aguolu (1996:99), most EEC countries have added tax as a means of ensuring uniformity of trading since goods and services more freely among these countries. Britain in 1973, introduced vat before joining the EEC.
Most developing state that has introduced vat, beginning with Brazil in 1967 has replaced their sales tax with vat, in order to ensure financial and economic coordination among the states in their countries. In Nigeria, vatm was recommended in 1991 in November 1991. The decision to accept the recommendation was made public in the 1997 budget speech. A committee set up on 1st June 1992 to examine the feasibility on the earlier recommendation, commended among other things that vat be administrated by an independent commission was rejected by the government. The administration of vat was given to Federal Inland Revenue Services (FIRS) which already had the responsibility of administering most other taxes in Nigeria.
Decree 102 of 1993 marked the phasing out of sales tax from 1st December 1993 and introduction of vat but by administration arrangement, involving for tax purpose commended on 1st January1994. (Chairman/Chief executive of FIRS 1996:1) presently there are 36 local vat offices in the federation each operating under supervision of a local vat officer. It is intended that local vat offices will be extended to all major commercial centers in the country and all local government headquarters in the federation.
Usman (1999:7) states that one of the cardinal objectives of 1999 budget is expanding the existing revenue base. bordering the vat base and increasing the number of vat offices among others is one of the avenue through which the policy thrust would be realized. The revenue estimate for vat 2002 was N50 billion and out of this amount, the state government will share N25billion, local government will share N17billion while the federal government will get N7.5 billion.
Vat is obviously a more efficient toll particularly in the globalization mitieu currently existing. It allows the state to use its vat revenues to assess its actual production with a view to assessing. The countries contributed via manufacturing and marketing in each state before the finished goods are produced. With the ECOWAS programme of regional economic integration in place, it is obvious that the EEC model of vat is more advantageous since every state, country is encourage to be part of the production process speeding up specialization, Okonma (2002:11).
It is against this backdrop that the researcher carried out an assessment of the impact of vat on revenue generation in Nigeria.
1.2              STATEMENT OF THE PROBLEM:
The radiate behind introduction of vat is informed by numbers of factors and considerations viz:
a.       The base of the sales tax as operated under decree No 7 of 1986 was narrow. It covered only nine categories of goods plus sales and services in registered hotels and similar establishments. Vat base include most professional services and banking transactions, which are high profit generating sectors.
b.      Since vat is based on the general consumption behaviour of the people, the expected high yield of revenue would boost state government revenue with minimal resistance from the tax payers. The big question is how far has the vat administrators succeeded in maximizing the funds accruable from the introduction of vat as a replacement to sales tax?
It is incontestable that the opportunity offered by the introduction of vat to boost revenue accruing to the government has not been fully utilized. Many vatable entities have failed to register and some most vat office lack the necessary tools to enforce their registration they continue evading the tax.
This obvious lapse on part of the vat administration machinery results that much revenue is lost to the government.
While the sale tax was simple although narrow based, vat as administered requires a little education ability, which a lot of the taxpayers may not comprehend. Particularly as much vat liability falls on persons who to all intents and purposes do not keep records.
The following questions were posited for this study;
a)      Has revenue generation from vat in Nigeria been efficient and effective?
b)      If the revenue generation from vat has not been efficient and effective, what are the factors militating against it efficient and effectiveness?
c)      What are the effects of this inefficiency and ineffective revenue generation?
d)     Are there ways of ameliorating the problems?
e)      How can these problems be mitigated or remedied?
1.3              OBJECTIVES OF THE STUDY
This study focuses on vat and its implementation in the Nigerian policy as a means of increasing funds accruable from taxation, particularly on its revenue generation capacity in Nigeria with a spotlight on performance and major problems facing its implementation as well as its advantages and disadvantages.
To this end, the major objectives of the study amongst other are:
§   To assess vat performance, its ability to meet its estimates and rate its efficiency
§   To identify the problems militating against the effective implementation and administration of vat.
§   To evaluate the effects of vat on revenue generation in Nigeria.
§   To identify the causes of vat inefficiency, their effect and suggest ways of improving vat efficiency.
§   To identify the tax payers reactions to vat with a view of removing negative attitudes.
This study is designed to assess the revenue generation capacity of the present vat system in Nigeria.
The research will deal with the computation of revenue derivable from vat since inception, the mechanics for calculating vat at various stages would be dealt with. This study however cannot cover all vat offices in Nigeria; hence samples would be drawn from the population. This research may highlight taxpayer’s attitudes but cannot go into the mechanics that gives visa to such attitudes ie the socio-cultural effects of vat is outside the scope of this study.
This research is of significance to various interest group such as the prospective researcher, vat directorate, the literacy world, government and tax payers.
This work is very important because it highlights problematic area, which would yield extensive information that would be relevant to other researchers on vat; it could also form a guideline to other researchers.   
This work is highly valued because it is a source of pride as a unique creation of the researcher and also because it is a prerequisite to the award of National Diploma in Accountancy.
The researcher believes that to the recommendations of this study are implemented by the VAT DIRECTORATE it will go a long way towards optimizing the revenue generation capacity of VAT, and other taxes.
The increase revenue that would be accruable from implementation of recommendations would go a long way towards increasing evenue generation as well as increasing the VAT BASE.
The taxpayers would benefit the recommendations carried out because payment would be made more convenient.
This research also contributes to existing literature on VAT.


Using our service is LEGAL and IS NOT prohibited by any university/college policies

You are allowed to use the original model papers you will receive in the following ways:

1. As a source for additional understanding of the subject

2. As a source for ideas for your own research (if properly referenced)

3. For PROPER paraphrasing ( see your university definition of plagiarism and acceptable paraphrase)

4. Direct citing ( if referenced properly)

Thank you so much for your respect to the authors copyright.

For more project materials

Log on to

Or call



Leave a comment...