This project is an attempt to analyze and evaluate the level of success made in the implementation and management of Value Added Tax. (VAT)  was introduced in Nigeria was seen by, many as another fixed policy that may not succeed.  In the contrary, this notion was proved wrong by the success of the Federal Board of Inland Revenue Services in the administration of VAT.  Under the Federal Board of Inland Revenue Services, there exist a VAT directorate responsible for the management and implementation of VAT in our country Nigeria.  This piece of work focused on the strategies adopted by the Federal Board of Inland Revenue Services facilitates payment by the taxable individuals. A touch is also made on the analysis and comparison of VAT with other forms of tax in Nigeria to prove its viability. Finally, the work treated the contributions of VAT to Federal, State and local government revenue and their expectations.


Title page                                                      

Certification                                                               ii

Approval page                                                     iii

Dedication                                                                 iv

Acknowledgement                                                v

Abstract                                                                    vii   


  1. Introduction

1.1  Statement of the problem

1.2  Purpose of study

1.3  Research Questions

1.4  Need for the study

1.5  Assumption of the study

1.6  Limitation of the study

1.7   Operational definition of terms                                                                                


  • Literature Review of VAT in Nigeria

2.1  VAT Reconstruction in Nigeria

2.2  VAT Returns

2.3  VAT Implementation in Nigeria

2.4  Advantage of VAT

2.5  Problem of VAT

2.6  Administration of VAT

2.7  Overview of VAT administration

2.8  The offences and penalties in VAT administration.

2.9  Taxable goods and service

2.10 Exempted goods and Service

2.11   VAT in versus other form of tax.

2.12   VAT versus Withholding Tax.

2.13   The way forward.


  • Research Methodology
    • Introduction
    • Population of the study
    • Sample size
    • Sources Collection of Data
    • Method of Data Analysis


  • Data Presentation and Analysis
    • Introduction
    • Data presentation
    • Analysis of  Responses


5.0  Summary, Conclusion, Recommendation

5.1  Summary of Findings

5.2  Conclusion

5.3  Recommendation




Taxation in every sense is a tool of economic reformation.  Government, the work over, have always found ways of imposing various levies on their subjects.  This is done with a view for raising revenue for its expenditure.

In Nigeria, some of the type of taxation Include personal Income tax, Capital gain tax, Capital transfer tax, sales tax, petroleum tax and Withholding tax.

Value added tax as a form of tax was introduced in Nigeria on December IST 1993.  Though the operational date was 1st January 1994.  VAT is a tax charged on the consumption of goods and service locally or imported into the country since then; many countries have adopted this tax policy as it has proved successful in its implementation.  In Africa, up to 17 countries including Nigeria adopted VAT and over sixty Countries in the World operated VAT since its inceptions.  The trend has kept on growing as many countries are turning toward VAT as a remedy for the other unsuccessful form of taxes, even though Nigeria joined the league of countries operating VAT just of 1994. She has very unique attributes in the operation of this new tax policy.  Nigeria charges a single rate of 5% unlike most of other countries which charge multiple high rates.

Value Added Tax (VAT) in Nigeria is Federal Government Tax which is central administered using the existing machinery of the Federal Inland Revenue Service (FIRS). Value Added Tax has a directorate within frame-work of the FIRS with the head of office in Abuja.  It was this group that proposed VAT and in that direction, a committee was set up to conduct studies on the implementation of VAT.

VAT replaced the sales tax whose base is regarded as narrow and which covers only nine categories of goods plus sales and service in registered hotels, Motels, and similar establishment.  In contrast, VAT base is broader and include most professional services and banking transactions which are high profit generating sectors.  The revenue generated from VAT is shared among the three tiers of government, the Federal, state and Local government.  When the tax system was first implemented in 1994, the state government received 50% of the proceeds.  While 20% went to Federal government for covering its administration cost.  In 1996, the distribution of the revenue generated from VAT was further shared as follows:  Federal government 35%, state government 40% and the local government 25% in 1997, the distribution formular was the same as in the 1996 distribution formula.  It was further changed as follows:

Federal Government 15%, State government 50% and Local government 35%, the 2000 distribution formula is Federal government 15%, state government 50% and local government 35%.


As a result of the unsuccessful nature of the previous economic recovery policies such as the structural adjustment program, we may see VAT as another such policies that would join the band Wagon of failure in the light of the above, these are some of problems associated with the management and implementation of VAT in Nigeria.

1. The Infrastructure facilities needed for the effective        implementation of VAT are either not in existence or in sub standard forms.

2.  It is not clear where government channel the revenue   derived from VAT in Nigeria.

3.   The public either directly or indirectly resist VAT.

4.   People argue that VAT will lead to inflationary tendency.

5. The VAT administration and the VAT able person are illiterates.

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