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THE PROBLEMS AND PROSPECT OF VALUE ADDED TAX (VAT)

ABSTRACT

The topic value Added Tax, which was introduced in the year 1993, is a tax on consumption born by the final consumer by paying five percent (5%) on any valuable product whether local produced or imported. The researcher data collection was on two bases, which include the primary, and secondary. The primary data was the information got by the researcher when the researcher conducted on oral interview with the officials of the federal in land Revenue service, the Accountant General of Enugu state and some of his office staff, and Enugu North Local Government Council staff who are basically concerned with the collection and the disbursement of the money from value Added Tax. The secondary data was got from the value Added Tax information circular No 93/ 04 dated 20thAugust 1993 and 93/ 05 dated 5th Nov. 1993. Other were value Added Tax Decree No. 102 of 1993 and principle and practice of Management by Breech E.F.L of 1975. = n  = ( N (e)2 1+N The data collected was presented and analyzed accordingly and the following findings were made; that there were, “Registered person” at the time of this project which in actual sense is a success; that the money collected by the federal inland Revenue service officers the “Registered persons” were promptly recorded and paid to the central Bank of Nigeria in on the importance of value Added Tax offices has not been established in the local Government use the money as it suits them; and that the payment of value Added Tax rate through central Bank in each state to the central Bank in Abuja is a delay tactics which hinders the sharing at the appropriate time. Based on the above findings, the following recommendations were made. That value Added Tax offices be established in all local government area to effect prompt payment and curb the value Added Tax rate evaders. By its establishment, it will become a household name in all the local government areas, that a specific project be mapped out by the federal Government for the utilization of the money realized from the Added Tax: that a specific account be opened into which the money realized will be paid instead of through the central Bank; and that a special Board be established for the sharing of the money realized.        

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND TO THE STUDY

Value Added Tax (VAT) is a system of tax recently introduced in Nigeria, which is based on imposition, and charging 5 percent tax on certain goods and services imported or produced locally in Nigeria.  The idea of introducing Value Added Tax in Nigeria came from the report of the study groups set up by the Federal Government in 1991 to review the entire Tax System. Value Added Tax was proposed and a committee was set up to carry out feasibility studies on its implementation.  In January 1993 government agreed to introduce Value Added Tax by the middle of the year and it was later shifted to 1st September, 1993.  Value Added Tax is a replacement of the existing sale’s Tax, which has been in operation under Federal Government Legislated Degree N0. 7 of 1986.

In some advanced countries of the world, this system of taxation had been in operation and its enormous benefits being harvested.  These countries are United States of America Britain, China and a host of others.  Nigeria on her own wants to take the bull by the horn by introducing value added tax like other benefiting countries earlier mentioned above despite all pitches that may appear to impede the good intentions of government to introduce and implement the system. The value added tax system has been introduced and made to get its location offices in all the 36 states of the Federation and Abuja.  

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