The recently signed nigerian finance bill quietly gave the minister of finance full. Vat was proposed and a committee was set up to carry out feasibility studies on its implementation. Aruwa, phd department of accounting, nasarawa state university, keffi abstract. Value added tax vat in nigeria is a consumption tax that was instated by the value added tax act of 1993. The paper examined the impact of value added tax on revenue generation in nigeria. This act may be cited as the value added tax amendment act, 2007. I certify, in accordance with section 2 1 of the acts authentication act, cap.
Tax system, company income tax, value added tax, personal income, tax policy, nigeria. Firs, law, nigeria, value added tax, value added tax act. Every taxable firm has a duty to issue a tax invoice for every single vat able transaction carried out by the business. The general guideline for the establishment of value added tax in nigeria was given by this committee. Nigerias general vat rate is 5%, with other rates including 0% that can apply to certain transactions. The value added tax vat in nigeria is tax payable on goods and services consumed by any person, whether government agencies, business organization or individuals.
It also relates to section 25c of companies income tax act cita cap. The study investigated the role of tax administration in revenue generation in nigeria between 1994 and 2015. Value added tax act laws of the federation of nigeria. Tax experts had argued in different ways as regards the success of value added tax in nigeria. Nigeria is a member of the economic community of west african states member trading bloc, which may affect international vat collection and regulations. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo statea case study of oredo local government area, edo state, nigeria proposalthe research work will discuss in detail the impact of taxation as an aid to economic development in edo state.
A brief examination tax practice and procedure in nigeria. Tax implication of mergers and acquisitions vanguard news. V1 lfn 2004 as updated to may 2007 that requires all companies to file returns in prescribed forms. The scope of this function will depend among other thing on the political and economic orientation of members of a particular society at a given point in time. Introduction taxation in nigeria following the extent laws is enforced by the 3 tiers of government, that is, federal, state, and local governments with each having its sphere clearly spelt out in the taxes and levies approved list for collection. Relevance of tax revenue resources to infrastructural. In nigeria, a tax appeal must be filed before one of the six 6 ntat in the region closest to the taxpayer, and after pleadings are completed, a hearing follows.
Secondary data were used in this study, the data were collected from cbn statistical bulletin also gathered from journals and textbook that is related to the research topic, the study. Value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of commencement of business. On the other hand, if the share acquisition company is set up in nigeria, any dividends received by the acquisition company from the target. Value added tax vat and inflation in nigeria 1990 to 2003. Value added tax simply regarded as vat is the tax levied on the supply of goods and services which is eventually borne by the final consumer of that good or service but collected at each stage of the production and distribution line. Learn how to combine files into a single pdf file using adobe acrobat dc. This piece of legislation was enacted to impose and charge value added tax on certain goods and services to provide for the administration and tax and related matters.
A valueadded tax vat, known in some countries as a goods and services tax gst, is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destinationbased tax, where the tax rate is based on the location of the customer. The impact of value added tax on revenue generation in nigeria. C 21 lfn 2004 as updated to may 2007 and section 15 of value added tax act vata cap. The nigerian tax appeal tribunal ntat was established in 2007, and, it replaced the former body of appeal commissioners bac and value added tax vat tribunals. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. The impact of value added tax in nigeria is that of a coin, what i mean by that is that it has two sides, both negative and positive,on the side of government, it has tremendiously increased the revenue earnings as opposed to the normal system before the advent of the vat, it has reduced the incidence of tax invasion as many people who hitherto used to avoid vat has been paying as it is. Meanwhile, value added tax is insensitive andrelatively unaffected by shortrun economic shifts.
Azubike1 michael okpara university of agriculture umudike umuahia abia state nigeria. Three research questions were formulated for the study. B hons introduction prior to the advent of the white man in nigeria, nigerians cheerfully paid taxes in kind by rendering free services such as clearing the bush, digging pit toilets, wells. Internal revenue services and the firs were involved with sales tax administration. It is a federal tax which is managed by the federal inland revenue service firs. Value added tax vat in nigeria is a federal government tax, which is administered using the existing machinery of the federal inland revenue services firs. As they are not carrying on business in nigeria, they are not the section further provides that such foreign required to register for, or charge nigerian vat. The vat is broad based while sales tax is narrower in application. The main vat rate in nigeria is 5% with a proposal to raise to 7. Vat has a directorate within the frame work of the federal inland revenue services firs with the head office in abuja. Nigerian value added tax system and the concept of basic food article pdf available in ssrn electronic journal january 2016 with 7,575 reads how we measure reads. The administration and problems of value added tax in nigeria. Tax laws provide a welldefined legal backing to the administration of each tax type states in clear terms the applicable rate, tax laws stipulate what constitutes offence and the appropriate sanctions to each offence.
Vat was proposed and a committee was set up to carry out. Corporate tax 2020 laws and regulations nigeria iclg. Using household survey data to grasp the effect of value added tax on, social and economic life of the populace. Value added tax imposed on the net sales value of nonexempt, qualifying goods and services in nigeria taxation is basically the process of collecting. In tax deal advisory tda services, we assess and provide advice on tax risks associated with an entity prior to its acquisition or disposal.
Vat is charged on most goods and services provides in nigeria and also on goods imported into nigeria. The valueadded tax vat is a broadbased tax on business designed to measure net dollar value generated in a country. Jun 14, 2017 value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of commencement of business. Value added tax and economic development in nigeria madugba, joseph ugochukwu1 joseph,u. Value added tax and economic growth in nigeria john chika onwuchekwa department of accounting, rhema university, aba, abia state, nigeria suleiman a. Pdf effect of value added tax on the nigerian economy. Value added tax and economic development in nigeria madugba. Merger is defined as any amalgamation of the undertakings or any part of the undertakings or interest of two or more companies or the undertakings or part of the undertakings of one or more. Commissioner of finance, kano sate, nigeria being a paper presented at the icanorganized 2015 fgn budget symposium with the theme. The secondary source of data was sought from central bank of nigeria statistical bulleting 2010, federal inland revenue service annual reports and chartered institute of taxation of nigeria journal.
If you add a folder that contains files other than pdfs, the nonpdf files are not added. Tax appeal tribunal issues a landmark decision in a vat. It is an indirect tax wherein the burden of the payment is borne by the final consumer of the goods and services. Mar, 2018 establishment of value added tax tribunal. They enshrine best practices in terms of ethical and professional conduct. Relevance of value added tax on infrastructural development in nigeria adereti, sanni and adesina 2011, uses time series data to study the effect of value added tax on the gross domestic product gdp. This webapp provides a simple way to merge pdf files. The value added tax act 2004 as amended vat act imposes. Combine or merge files into a single pdf, adobe acrobat dc.
Vat is a consumption tax payable on the goods and service consumed by any person, whether government agencies, business organizations or individuals. The target of vat is consumption of goods and services and unless an item is specifically exempted by law, the consumer is liable to the tax. This paper attempts to examine the relationship between value added tax and economic development. An act to impose and charge value added tax on certain goods and services and to provide for the administration of the tax and matters related thereto. Enter on line 110 the total input tax claimable on internet purchases for. The valueadded tax vat is administered by the federal inland revenue service firs in abuja. Value added tax the guardian nigeria news nigeria and. The usual vat is a general sales tax on all goods and services. A withholding tax of 10% is deducted from the dividend paid by a nigerian company to a nonresident company. Value added tax, revenue generation, petroleum profit tax, company income tax. Value added tax and economic growth in nigeria john chika.
A survey of vatable nigerian organizations, firs staff and the publics was conducted to gain insights into the way vat is administered, its relevance in revenue generation, savings and consumption of. Get free research paper on value added tax in nigeria. Total tax revenue and total federal government revenue from 1 %4 to 2008. We have extensive experience and industrywide credentials to handle tax due diligence and structuring, with special focus on merger and acquisition transactions. Also, you can add more pdfs to combine them and merge them into one single document. Government to impose personal income tax for every year of assessment on the personal income of individuals who are resident for the year in the state under the provisions of the first schedule to the decree. How important is the value added tax to the nigeria economy. Folake eliasadebowale is a corporate partner and head of the firms private equity and oil and gas teams. Pdf nigerian value added tax system and the concept of. In the same vein, zaman, okasha, and iqbal, 2012 examine the impact of value added tax in pakistans economy. What you need to know about value added tax vat in nigeria. A tax invoice is similar in many ways to a normal sales or purchases invoice, except that it has provision for vat registration number and vat payment at the prescribed rate.
The study is aimed at the appraisal of revenue generation in nigeria. It is levied at each stage of production and accumulates so that it is equivalent to a tax on all final household consumption. This study analyses the relevance and the problems of value added tax vat in nigeria. Oct 23, 2014 this research work studied the impact of value added tax on revenue generation in nigeria. One of the attempts to expand the tax net with minimum resistance and also to reduce tax evasion so that most of the tax income would get to the nigerian government is the introduction of value added tax in nigeria in 1993. Nigeria is the thirteenth largest producer of crude oil with 2. The nations fiscal challenges and way forward for the new administration at shell hall, muson centre, onikan, lagos, nigeria thursday, august, 2015.
The impact of value added tax on revenue generation in nigeria includes abstract and chapter one, complete project material available the impact of value added tax on revenue generation in nigeria table of contents chapter one 1. Synopsis of value added tax administration in nigeria. You can either select the files you want to merge from you computer or drop them on the app using drag. Effect of value added tax on the nigerian economy article pdf available in european academic research 52. It can also be said to be tax on spending or consumption levied at every stage of transaction but eventually borne by the final consumer of such goods and services. Value added tax, tax revenue, gross domestic product, laffer curve, tax reform. Mar 28, 2017 nigeria remains an important investment destination, accounting for 43% of deal volume and 64% of reported private equity deal value in west africa between 20102016 h1.
President muhammadu buhari signed the finance bill 2019 pdf. The cita in section 2912 cap 21, lfn, 2004 provides that no merger, takeover, transfer or restructuring of the trade or business carried on by a company shall take place without having. Value added tax news latest breaking stories and top. Value added tax in nigeria how to calculate vatable. Capital gains tax act 1990 world intellectual property. The importance, how to, effect causes relationship, comparison, history, role, solutions are discussed. Value added tax vat is a consumption tax, levied at each stage of the consumption chain and borne by the final. You can remove the tag, or use the page viewer web. Value added tax vat is a tax levied on goods and services consumed.
The ability to generate sustainable revenue remains a huge challenge for the nigerian government, especially due to the decline and instability. The government has certain functions to perform for the benefits of those it governs. You can add files or a folder from your computer, or add content. The vat is designed to raise large amounts of revenue typically 5 to 10% of gross. Vat is also a replacement of sales tax in nigeria as in other countries of the world. Experience has shown that in many instances, counterparties to business combinations sometimes fail to evaluate the tax implications of the proposed business combination pre andpost the transaction. Value added tax and economic development in nigeria. Revenue implications of nigerias tax system in nigeria. This tax is a replacement for the old sales tax which had a very narrow field of goods to which this tax could be charged. Read all the latest news, breaking stories, top headlines, opinion, pictures and videos about value added tax from nigeria and the world on today. A value added tax vat, known in some countries as a goods and services tax gst, is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destinationbased tax, where the tax rate is based on the location of the customer. Nasiru ibrahim arab, clerk to the national assembly. On the other hand, if the share acquisition company is set up in nigeria. Some even said that the success of vat in developing country like nigeria, is going to be dependent on the level of publicity bring into it, as well as the level of education of potential prayers.
The minimum tax payable is based on the turnover realised by the company and it is payable on or before 15 february following the financial year when all companies will be making their first payment for corporate tax. A gives an overview of key recent developments affecting doing business in nigeria as well as an introduction to the legal system. Statutory requirement under companies income tax act cita the cita in section 2912 cap 21, lfn, 2004 provides that no merger, takeover, transfer or restructuring of the trade or business. Only a limited number of supplies are nilrated, meaning any vat suffered may be recredited to the tax payer. In nigeria, a revised mfb licence could spur fintech mergers and acquisitions.
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