Abstract
This study was on Current law and practice of value added tax in Nigeria. Two objectives were raised which included: To find out the law of values added tax in Nigeria and to find out the practice of values added tax in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from CBN. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Chapter one
Introduction
1.1Background of the study
Countries introduce a Value Added Tax (VAT) because they are dissatisfied with their existing tax structure. The Value Added Tax (VAT) was introduced in Nigeria in 1993 by the Federal Military Government. Before then, Sales tax was under the jurisdiction of the States and generally poorly administered with marginal contribution in terms of revenue. The idea of introducing VAT was recommended by the Study Group set up by the Federal Government in 1991 to review the tax system of the Federation as a replacement of Sales Tax. Sanni, A. (2011). After extensive deliberation and consultation, VAT was introduced on 24th August 1993 as a federal tax by the Value Added Tax Decree. Since, then the relative success of VAT in Nigeria has surpassed the expectations of all sceptics including the International Monetary Fund (IMF) and emerged as a significant source of income for all the levels of government. The current policy is to gradually reduce the rate of income tax while focus is shifted to indirect taxes, especially VAT. According to the National Tax Policy Document:
“It is proposed to have a shift from direct to indirect taxation within the non-oil sector in order to stimulate economic growth in the sectors, whilst still meeting revenue requirements. This is particularly necessary, given that oil revenues are no longer viewed as a sustainable source of revenue and there is the urgent necessity to diversify tax revenue. Ogunrinde, S. O. (2013). In this regard, it is proposed that there should be lower rates of direct taxes such as Companies’ Income and Personal Income tax to reduce the cost of doing business in Nigeria by increasing cash flow and disposable income for corporate entities and individuals alike.” A writer has, however, cautioned against any temptation to abolish income tax in favour of VAT. According to the learned writer “The two taxes can nonetheless be efficiently administered side by side without any problem especially in the context of the low tax regime. There should be no question of one replacing the other. They are complimentary in revenue mobilisation”. Since 1993, the Value Added Tax Act, had been amended more than half a dozen times the latest being the Value Added Tax (Amendment) Act14 of 2007 Abdulrazaq, M. T. (2012). Some of the amendments have introduced significant changes which are yet to be reflected in the body of existing literature.
Statement of the problem
This study discusses the thrust and evolutionary path of the changes to the legal and administrative framework of VAT and assesses the direction of development. The aim is to succinctly discuss the current position of the VAT law and administration in Nigeria in a coherent form for the proper guidance of taxpayers, researchers and foreign investors.
Objective of the study
The objectives of the study are;
- To find out the law of values added tax in Nigeria
- To find out the practice of values added tax in Nigeria
Research hypotheses
The following research hypotheses are formulated;
H0: there is no law of values added tax in Nigeria
H1: there is law of values added tax in Nigeria
H0: there is no practice of values added tax in Nigeria
H2: there is practice of values added tax in Nigeria
Significance of the study
The study will be significant to students and the policy makers in Nigeria. the study will give a clear insight on the current law and practice of values added tax in Nigeria. the study will serve as a reference to other researcher that will embark on the related topic
Scope and limitation of the study
The scope of the study covers Current law and practice of value added tax in Nigeria. the study will be limited to CBN
Limitations/constraints are inevitable in carrying out a research work of this nature. However, in the course of this research, the following constraints were encountered thus:
- Non-availability of enough resources (finance): A work of this nature is very tasking financially, money had to be spent at various stages of the research such resources which may aid proper carrying out of the study were not adequately available.
Time factor: The time used in carrying out the research work is relatively not enough to bring the best information out of it. However, I hope that the little that is contained in this study will go a long way in solving many greater problems.
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