The study examined the impact of VAT on internally generated revenues in Lagos State over a six-year period from 2011 to 2016. The study found that VAT is an excise tax on economic transactions involving imports. Sales tax is collected as an indirect tax at a flat rate of 5% and is collected on behalf of the government from businesses and organizations registered with the Federal Internal Revenue Service (FIRS) for sales tax services. This study employs secondary data, i.e. panel data. The data comes from the Lagos state tax authority. The variables of interest are calculated from financial statements of selected internal financial services.

Analysis of the data was performed through descriptive and inferential statistics to analyze the data. As support, it applies multiple linear regression analysis to estimate the coefficients of the parameter estimates for the given model.

Data for the variables were obtained from the Lagos State Department of Statistics and the Lagos State Board of Revenue. IGR is contextualized as the sum of income from departments, departments and agencies (MDA), Pay-As-You-Earn (PAYE), road taxes, direct assessments, and other taxes. A model was specified in which IGR is expressed as a function of VAT. Models were estimated using simple linear regression analysis. The results showed that VAT had a significant positive impact on his IGR in Lagos State. The 1 billion naira VAT hike is expected to add around N739 million to his IGR in Lagos state. Furthermore, we found that approximately 92.6% of the IGR variation was explained by VAT.

The study concludes that value added tax contributed enormously to internal generated revenue of Lagos State government between 2011 and 2016.

To this end, the study suggested amongst others that Lagos State government should enact fiscal laws and legislations and strengthen existing ones in line with macroeconomic objectives of economic growth, full employment, financial independence and price stability; Tax agencies and authorities in Lagos State should establish cordial relationship with relevant professional tax bodies; Lagos State government should pursue policies that will enhance industrial development; Deliberate policies of internal control should be put in place by the Lagos State Board of Inland Revenue.



1.1 Background to the Study

Countries introduced a Value Added Tax (VAT) because they are dissatisfied with their existing tax structure. This dissatisfaction falls broadly into one, or possibly all, of four categories:
(1) the existing sales taxes are unsatisfactory; (2) a customs union requires discriminatory border taxes to be abolished; (3) a reduction in other taxation is sought; or (4) the evolution of the tax system has not kept pace with the development of the economy (Tait, 1988). If VAT had a birth certificate, the place and year of birth would read ‘France’, ‘1954’ respectively. Introduced in France in 1954, the VAT was a form of VAT on the consumption of goods charged at the stage of production. However, in 1968, this tax was merged with the existing sales tax on services and the local tax on retail sales, resulting in a single comprehensive tax covering the entire retail tier. (Owens, 1996) Value Added Tax (VAT) was introduced into Nigeria in 1993 by the Federal Military Government. Since then, the VAT regulations have been amended by him more than six times, most recently with the VAT (Amendment) Act 2007. literature. The idea of ​​introducing VAT came from Dr. Sylvester Hugo, who headed a study group on indirect taxes in November 1991. accept the decision

1.2 Problem Description


VAT as a consumption tax has a broader scope as, if properly managed, the sources of adverse deviations can be well controlled (Onaolapo, Aworemi & Ajala, 2013). Sales tax revenue helps strengthen the financial base of any economy. But it is about leveraging that potential, recognizing the taxpayer as an individual, minimizing profits and choosing a consumption tax that protects evasive behavior.

With the introduction of the VAT, the revenue base of the Nigerian federal government will increase as the problems of tax avoidance and tax evasion decrease. (Okori & Afolayan, 2015). The VAT also encouraged investment by shifting the tax burden to consumption rather than saving. With increased investment, this translates into increased national income. In addition, VAT contributes to improving the living standards of citizens. This is because income from VAT is used to provide public goods such as roads, bridges, schools and hospitals, benefiting both the rich and the poor. It also creates jobs for many Nigerians. Inadequate VAT management, identified by Olaoye (2009), is one of the problems facing VAT in Nigeria. Tax authorities only perform technical functions without performing the necessary administrative functions. Given the complexity of tax administration, it must be ineffective. Basically, performing a purely technical function leads to false declarations, refusal to fill out tax returns, fraud, inflation of deductible expenses, smuggling, late payments, illegal refueling, etc. . Also, the misconduct of some tax officials could have a demoralizing effect on effective tax administration in Nigeria, especially where such practices can affect honest taxpayers. Therefore, the purpose of this study was to examine the impact of VAT on internal revenues in Lagos State. 1.3 Research question

As a follow-up to the purpose of this study, we have the following research questions.

Does Excise Tax Affect Income Tax in Lagos State, Nigeria?
Does income VAT affect income tax in Lagos State, Nigeria?
Is there a significant relationship between Gross Product and Income Tax in Lagos State, Nigeria?
How does VAT administration relate to income tax in Lagos State, Nigeria?
1.4 Purpose of the survey

The primary objective is to assess the impact of VAT on internally generated revenues in Lagos State, Nigeria. Specifically, the objectives of this study are to:

Identify the impact of sales tax on income tax in Lagos State, Nigeria.
Determines income tax implications for income tax in Lagos State, Nigeria.
Examine the important relationship between Gross Product and Income Tax in Lagos State, Nigeria.
Access the impact of VAT administration on income tax in Lagos State, Nigeria.
1.5 Research hypothesis

The following generated null hypotheses are examined

Excise duty does not affect income tax in Lagos State, Nigeria. Ho2:
In Lagos State, Nigeria, income tax does not have a significant impact on income tax.

There is no significant relationship between Gross Product and Income Tax in Lagos State, Nigeria.

VAT administration does not affect income tax in Lagos State, Nigeria.

1.6 Validity of research

This study will be an invaluable resource for researchers, students, marketers, accountants, bankers, businesses, government agencies and related fields wishing to learn more about the concept of “VAT”. Benefit to the economic development of Lagos State. The origins of VAT, its application and its impact on internally generated revenues in Lagos State have been analyzed and will be an essential resource for the above mentioned beneficiaries.

1.7 Scope of investigation

The study focuses on the economy of the Lagos State Government, but specifically relates to the Lagos State Internal Revenue Service (LIRS), the tax authority responsible for sales tax in Lagos State. As data collection was limited to his VAT office in Lagos State, the findings of the study were generalized to cover his VAT activities for the decade from 2007 to 2016, covering the states of Ikeja and Lagos. It was held within the State Internal Revenue Service. , Lagos. 1.8 Definition of terms

A mandatory financial burden or other type of levy imposed by a government agency on a taxpayer (individual or entity) to fund various public expenditures. Non-payment, tax evasion or tax evasion is a crime.
Value-added tax:
This is known as Goods and Services Tax in some countries. It is a type of general excise tax that is levied in stages based on the increase in value of a product or service at each stage of production or distribution.
Goods and services subject to VAT:
This is all goods manufactured/assembled in or imported into Nigeria, except those specifically exempted by law. All items not included in this published list are subject to the standard 5% tax rate, except for exports where the rate is 0%. Who is subject to VAT:
Persons subject to VAT within the meaning of the VAT law are “producers, wholesalers, distributors and providers of services (those who use tangible or intangible property for the purpose of generating income from mining and commerce or business”). In other words, a VAT taxpayer is a person who trades goods or services subject to VAT in return.
Tax period:
This is the period during which VAT is collected and paid. The tax period in Nigeria is until the 21st day of the month following the tax month.
Tax invoice:
The institution claiming VAT claims. This is an invoice or receipt issued to purchasers of VATable goods and services.
Value-added tax:
A tax paid to a governing body on the sale of certain goods or services. Laws generally permit or require sellers to collect taxes from customers at the time of purchase.
Control system:
The legal system for assessing and collecting taxes.
Estimates of costs, revenues, and resources over time that reflect an assessment of future financial conditions and objectives. It serves as a plan of action to achieve quantified goals, a metric to measure performance, and a means of dealing with foreseeable adverse situations.
An economy is a large set of interconnected production and consumption activities that help determine how to allocate scarce resources.
Tax management:
A financial services, financial institution, or tax agency is a government agency that collects government revenue, including tax and sometimes non-tax revenue.
Income that a company derives from its normal business activities, usually from the sale of goods and services.


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