The Implication Of Nigeria Value Added Tax (Vat) On The Payers
Chapter One
Preface
levies in ultramodern economics are the most important source of government profit. The are mandatory impositions that are regularly assessed, and as a rule, not designated for a special purpose they’re regarded as a donation to the general profit pool from which utmost government expenditure are financed.
Taxation occupies a top position in the Nigerian frugality as in other countries. Value – Added – duty was introduced in Nigeria presently to replace the old deals duty. The old deals duty, has been in operation under the civil government enacted decree No 7 of 1986, but it’s operated on the base of hearthstone
still, the recently introduced value added duty is operated under the civil government enacted decree No 102 of July 1993. Handbasket is a form of circular duty whose burden is shifted from the manufacturers through the distribution channels to the final consumer who also bears the final burden
Value added duty came into effect on 1st January 1994 the duty is a duty on consumption. Handbasket is a multi stage duty which is put on goods and services as they pass through the colorful stages in the business chain. From manufacturing, importation through wholesales to relating. The payment is borne by the final consumer because it’s included n the selling price, it’s administration involves a credit medium system whereby a taxable person who’s charged duty on the inventories to his entitled to set off that duty against the duty charged by him is force to other persons, this making him only responsible for the excess of the duty on the inventories from him over the duty on the inventories to him.
The duty paid or outstanding by a taxable person on the importation of a business carried on by him is known as his ‘ input duty ’ while the duty paid on the inventories made by him is known as his ‘ out put duty ’. The Handbasket outstanding in substance is the affair duty, less input duty.
The duty on the force of goods or services is chargeable only where-
n The force is a taxable force and
n The goods and services are supplied by a taxable person in the course of a business carried on by him and is outstanding by the person supplying the goods and services.
Handbasket in Nigeria is reckoned at a flat rate of 5 of the price of the goods and services. This is affected on behalf of the government by business and association that have registered for Handbasket purpose. Handbasket is operated by over, sixty countries including some countries on the west of Africa.
In Nigeria, two agencies of the muted nations association the transnational financial fund( IMP) and the world bank which are nearly linked with the establishment and monitoring of the structural Adjustment programme( SAP) had since 1987 been advising that the Nigeria duty system need to be reformed so that the government will be less dependant on the petroleum profit generation.
In an attempt to prompt this reformation of duty system, the civil government set up two duty study groups in 1991. The civil ministry of finance and husbandry development set up one study group to study and make recommendation on the reforms demanded in direct levies in Nigeria. The civil ministry of budget and planning set up another study group which is more applicable to our study on circular levies and inaugurated on 26th April in 1991 with the objects of among other to
– Shift taxation towards consumption rather than saving.
– Ameliorate the administration of circular levies.
– give impulses for import product.
– Maintain a fairly ever duty prevalence.
– Reduce dependence on oil painting profit.
The general guideline for the establishment of value added duty in Nigeria was given by this commission. value Added duty was introduced into Nigeria frugality duty system in January 1st, 1994, following the elegant provision of decree No.102 of July, 1993 but it has been in operation in other countries before it was introduced in Nigeria.
In the Nigeria environment, it’s a consumption duty of five percent( 5) assessed on every handbasket suitable goods and services of every stage of product
The buyers of goods and services in the case of value Added duty are tested and this is country to deals duty where the produces or merchandisers of goods and services pay the duty.
The final cousumers of these handbasket suitable goods and service bear the burden of the duty. AS a result the design content which form the center of the study that’s the counteraccusations of Handbasket on the payers.
Statement Of The Problem
important as it’s known that Handbasket will increase the profit base of Nigeria, it can not be free from some problem. In view of the mandatory nature of and strong aversion of duty( Handbasket) payment goods must be constitute made to make any duty system as seductive and as accessibly as possible.
This can be achieved by regularly assessing the duty system with a known set of criteria modified to suit the percolating circumstance of time.
The Question which this reseach work aims at answering could be epitomized into the following problem statement
1Corporate performance could be bettered upon under the value added duty. How realistic is this supposition?
2 Given the percent profitable situation and assiduity condition, how are individual/ companies dealing on goods and services which are subject to Handbasket, going to the affected by this duty system.
3 With the apparent difficulty encountered by enterprises in holding down costs, and give the impulses in Handbasket accruing to firm operating at minimum costs, have a company’s pricing policy most likely to be affected.
Industrialists, manufacturers, distributors, individualities and association haven’t accept Handbasket, they are the opinion that Handbasket isn’t good for a developing country like Nigeria. The problems of enforceability has to be attack by employing honest and veracious labor force who’ll apply the payment of Handbasket so levied severe penalties has to be espoused so as to apply payment by Handbasket defaulters.
Purpose Of The Study
The purpose of the study is find out the extent to which the duty in disquisition, Handbasket will indicate to the duty payers and final consumers. therefore the study is designed to probe the recrimination which value added duty will have on the duty payers, that’s the relationship between the duty and those paying it in the Nigerian environment of duty system.
Significance Of The Study
This work is of academic significance in the sense that it’ll contribute to the understanding of the Value Added Tax and it’s recrimination on duty payers. The practical significance lies on the fact that the work would punctuate the extent to which duty payers could take advantage of the openings in the duty system to ameliorate their standard of living indeed of lesser significance is the eventuality of this study in throwing further light on the unintended adverse goods of the duty on some diligence
Exploration Of Thesis
suppositions 1
Ho Handbasket is duty grounded on consumption of goods and services.
H1 Handbasket isn’t duty grounded on consumption of goods and services.
suppositions 2
Ho there are effect on the price of variable goods and services
H1 there’s no effect on the price of variable goods and services
compass of limitation
This is the compass of the study that works out aspects of the study to concentrate sweats upon.
Though the study is supposed to be carried out on the variable persons and establishments in the thirty six( 36) countries of Nigeria and the civil capital home, Abuja, the study due to fiscal cost of transportation and time limit is concentrated only on the duty payers in Enugu state.
In this state not all payers will concentrate but rather many named was grounded in Enugu civic will be concentrated.
The recrimination on the duty payers delved still will be taken to be applicable to all the duty payers in the state and each over the country.
Description Of Terms
There are certain complex and strange specialized terms which needs to be easily defined as regards their operation, applied to this study for easy understanding, there are explained in a way as to make their contextual operation clear to the anthology.
i) Handbasket This is a duty of the force of goods and services which is ultimately borne by the final consumer, both collected at each stages of product and distribution chain.
ii) VARIABLE GOODS SREVICES These are goods or services that subdue to Handbasket. There are list of these goods and services in the excursus
iii) VARIABLE PERSON These are business association that are registered for Handbasket purpose, the enterprises collect Handbasket from the guests and rant to the Handbasket secretarials.
iv) TAXABLE PERIOD This is the period covered by any particular return. In Nigeria the taxable period is one month, in other words the returns and payment are typically made yearly to the original Handbasket office on or before the 14th day of the month next following that in which the force was made.
v) duty tab This is the key to any credit claim on Handbasket. Whenever a person supplies a variable duty tab in support of the sale and take a dupe for himself
vi) Affair duty These are levies paid by variable persons on the inventories he made.
vii) INPUT duty These are those Handbasket paid by the guests and collected by the variable persons.
viii) ZERO RATED GOODS These are goods that attracts a Handbasket rate of 0 while the normal rate of Handbasket in Nigeria is 5 for all goods and services variable
ix) CHI- SQUARE This is the statistical ways used in testing the thesis concerning the difference between a set of observed frequentness of a sample and a corresponding set of anticipated frequentness
x) DEGREE OF FREEDOM This is the range within which the thesis is to be tested.
xi) CONFIDENCE position The position of limit within which we may be confident that the population mean falsehoods.
xii) duty Prevalence This is the final person( s) who bear the duty burden.
xiii) NIGERIA ECONOMY This is the total out put of Nigeria as a whole.
xiv) duty SYSTEM This is the way duty is being regulated and administered
xv) Deals duty This is the duty assessed on the deals of a commendation generally collected at whole deals or retail stages.
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