The Effect Of Value Added Tax In Nigeria Industries

THE EFFECT OF VALUE ADDED TAX  IN NIGERIA INDUSTRIES

Abstract

This study examines how value added tax functions as a mechanism for generating money for the nation’s economic development. It focuses specifically on how it affects Nigerian industry.

The project’s major goal is to give readers’ businesses, the government, and the general public access to information that will help them fully comprehend value added tax (VAT) as a type of tax and determine whether this tax system has any appreciable effects on particular industries.

The project was separated into three chapters, introductory pages, and an appendix for explanation in order to accomplish these goals.

The study’s purpose is briefly stated in Chapter 1’s introduction, and it also looks at the problem statement, the significance of the study’s scope, its limitations, and definition terms.

The literature review in Chapter 2 was composed of passages from textbooks, fresh paper journals, and other magazines.

The summary, conclusion, and recommendation are all included in chapter three.

Assumable Contents

front page

Acceptance page

Dedication

Acknowledgment

Abstract

List of contents

Chapiter 1

Introduction

Background information for the study

1.2 A description of the issue

1.3 The purpose of the research

1.2 The study’s importance is discussed in section

1.5 Study’s domain of investigation

1.6 Limitations of the study, paragraph

1.7 Definition of key words

Apartment Two

Review of the literature

2.1 Definition and Background of VAT

2.2 Nigeria’s VAT administration and implementation

2.3 The purpose of the VAT

2.4 The impact of the VAT on industries

2.5 Prospect and assessment of VAT in Nigeria’s problems

2.6 Mathematical calculations and accounting

Accounting for VAT, section 2.7

Section Three

Summary of findings, advice, and judgment

3.1 Recapitulation

3.2.1 Recommendation

The 3.3 Recommendation

3.4 Conclusion

Table list

References

Chapiter 1

Introducton

1.1 The Study’s Background

In Nigeria, the notion of value added tax was first introduced in January 1994.It predates the country’s introduction of the structural adjustment programme (SAP) in 1987.

The global bank and the international monetary fund (IMF), two of the architects of SAP, had recommended a comprehensive overhaul of the nation’s tax structure as a magic bullet for economic recovery.

In response, the federal military administration established a series of committees, which resulted in the implementation of VAT in 1994 by the promulgation of decree 102.

Sales tax was in use prior to the introduction of VAT. The committee’s suggestion led to the elimination of sales tax and the implementation of VAT as its successor.

The economic strategy underlying SAP was primarily to increase government income. In particular, the VAT aims to: In addition to reducing the significant imbalance in the government’s books caused by government spending constantly exceeding receipts;

Reduce the reliance of the nation on oil revenue.

Bring in a lot of money due to the impact on consumers, who scarcely realize they are paying taxes.

Encourage exports to improve the balance of payments position by doing so.

Maintain consistent tax incidence throughout the various production stages.

Advocates of VAT had, among other things, argued that the new system was advantageous for the economy because it will reduce consumption of luxuries and socially unwelcome goods and services. Further, it was argued that the VAT would eliminate the country’s numerous taxes.

Additionally, it was asserted that since it reduces consumption, it will free up more funds for saving and later investment. The VAT was also designed to encourage export while discouraging import because export is tax-exempt while import is substantially taxed.

The overall goal of the new tax system was to improve revenue and alter attitudes in order to revitalize the country’s economy. At its inception, the federal inland revenue services (FIRO), which were in charge of implementing the enabling law, were in opposition to it, along with the manufacturers association of Nigeria. The opponents claimed that the value-added tax (VAT) was regressive, discriminatory, and unpopular; this is not to say that VAT does not, however, have some drawbacks. Five years into its implementation, VAT includes a number of government and privately owned industries and services as participants. Any policy can have an impact after five years, thus it is reasonable to consider how the VAT has affected Nigerian industries.

1.2.1 Statement Of The Problem

Value added tax (VAT) was one of these deliberate economic policies implemented to get the economy moving. It has been difficult to prescribe economic and fiscal policy that will keep Nigeria’s economy afloat. Other different economic methods, principles, and policies have been put in place by several leaders in the past.

The economy was dealing with significant, multifaceted issues. To turn things around, the government always prioritizes the private sector and industries in its fiscal and monetary policies.

At this stage of VAT implementation and execution, industries are in the spotlight. They are the producers of various goods and suppliers whose goods are taxed at every stage of production. Despite the fact that VAT may bring in more money for the government, what issue does it cause for businesses? Does it result in a gain or a loss for