This work was aimed at evaluating tax payers perception of the value-added tax system in Nigeria.

In 1993 the Federal Government promulgated a Decree in respect of the introduction of VAT, which is a tax on the consumption of goods and services. This was in view of the numerous benefits, which could be derived from the exercise. Prior to the introduction of VAT sales, the tax system was in operation but tax experts see it as being too narrow and also unable to generate the expected revenue for the government. This also led to the need for an alternative tax system VAT.

However all the above are the views of all government the research finds it necessary to evaluate the opinions of taxpayers who are the incidence bearers of VAT in order to make a comparative analysis with the opinions of the government. Three samples were used in this study namely; consumers, producers and tax official. The two hypothesis test where all in favour of  VAT proving that VAT is a fair and equitable system and it is perceived to favour taxpayers.

In order to enhance the performance of the VAT system, the researcher made some recommendations to the Federal Government.    







Table of contents


1.0 Introduction

1.1 Statement of the problem

1.2 Purpose of the study

1.3 Significance of the  study

1.4 Organisation of the study

1.5 Research  questions

1.6 Hypothesis

1.7 Definition of terms

1.8 Test of data

1.9 Limitation of the study


2.1 Introduction

2.2 Some definitions of Taxation

2.3 Importance of Taxes

2.4 Taxes evasion and avoidance

2.5 Value added tax

2.5.1 Background of VAT

2.5.2 Origin of VAT

2.5.3 Sales Tax

2.5.4 VAT as replacement of sales Tax

2.5.5 Position of VAT in sales taxes

2.5.6 Value added tax Nigeria sales tax

2.5.7 Forms of VAT

2.5.8 Major features of VAT

2.5.9 The Nature of VAT 

2.6.0 Administration and Policy

2.6.1 Registration

2.6.2 Supplies

2.6.3 Schedules of VAT Decree 102 of 1993

2.6.4 Determination of value

2.6.5 Returns

2.6.6 Remittance of VAT

2.6.7 Liability to VAT

2.6.8 Records and Account

2.6.9 VAT Inspection

2.7.0 Offences and penalties

2.8.0 Administration of VAT on imports 

2.8.1 Registration

2.8.2 Vatable imported services

2.8.3 Determination of values

2.8.4 The right of Appeal

2.8.5 Assessment

2.8.6 Payment

2.8.7 Input tax

2.8.8 Evidence of input tax

2.8.9 Rendition of collection: Return by Nigeria Custom

2.9.0 Advantages of VAT

2.9.1 Demerits of VAT

2.9.2 Merits of VAT in Nigeria Economy


3.1 Introduction

3.2 Sampling procedure

3.3 Method of data collection

3.3.1 Questionnaire design and administration

3.3.2 Personal interview

3.3.3 Survey of the existing documents

3.3.4 Statistical technique   


4.1 Introduction 

4.2 Presentation and analysis of data

4.3 hypothesis testing


5.1 Findings

5.2 Recommendation

5.3 Conclusion

5.4 Recommendation for further research





Taxation has long been practised in Nigeria. Initially, only men were expected to pay taxes but now all people working and anybody found in the capacity of paying tax are obligated to pay tax.

Tax in a mandatory levy on income charged for the purpose of carrying out government activities losses incurred by the government in recent times through tax evasion is increasing rapidly despite the pathetic financial and economic state of the country. There is a daily report in newspaper and magazines that the government losses billions of naira yearly due to tax evasion and the fraudulent practices of the tax officials. This has attributed to many factors. Most people attribute this to the fact that the country’s tax system is highly income base and since income is taxed only at one point or stage, a lot of evasion results.

In Nigeria, many different goods are consumed. For this reason, tax experts see consumption as the actual habit and as such, the need to shift the tax base from income tax to consumption tax. This necessitated the introduction of sales tax in Nigeria through degree N0. 7 of 1986.

However, it was discovered that the sales tax is narrow because it does not cover a lot of goods and services. This prompted the introduction of Value Added Tax (VAT) in Nigeria.

The idea of introducing VAT in Nigeria came from the report of the study group set up by the Federal Government in 1991 to review the entire tax system, VAT was proposed and a committee was set up to carry out feasibility studies on its implementation. In January 1993, the government agreed to introduce VAT through the instrumentality of the VAT Degree 102 of 1993. This was meant to be effective from January 1 1994. It came on stream as a replacement to its antecedent, the sales tax, which was characterized by a lot of lapses inadequacies and restrictive coverage. VAT is a consumption tax imported on all manufactured goods, industrial raw material and other imported into or product in Nigeria a single rate of five per cent. Potentially, it dragged cover virtually everybody, since one thing or the other except in the cases of specific items that are exempted.

Several benefits which the government expected to derive from value-added tax (VAT) were enumerated. During several others they are

i.        Increase in revenue generation

ii.       Facilitation of administrative enforcement

iii.      Reduction in revenue losses through tax evasion

iv.      Enhancement of documentation of the transaction

v.       Encouragement of rapid industrial growth by allowing credit for input taxes for capital goods.

vi.      Maintenance of neutrality in tax payment since it is broad-based and has a single rate.

The government has conveyed these benefits to the public and has also organized workshops and seminars to educate the producers, suppliers, consumers, tax officials and the general public on the VAT system in Nigeria. However, the perception of taxpayers is necessary at this stage and this is what this research is to find out.


The Federal Government has made frantic efforts to convince the public of the need for a VAT system in Nigeria. It has informed the public of the benefits which have been derived from VAT, for example, a reduction of tax evasion, increase in government revenue and so on. This implies that the government sees VAT as a good tax system. But the taxpayer may not have the same view as the government, they may they will most definitely be reluctant to pay.

The problem or the question, therefore, is what is the perception of the taxpayers or the public on tax systems? Do they see it as being important as the government does? It is in view of the above questions that the researcher has decided to find out and evaluate the perception of the public or taxpayers on the valued added tax in Nigeria.


It was the purpose of the study to evaluate the views of the taxpayers on Value Added Tax (VAT). On the basis of this, the researcher will be able to say if VAT has done more harm than good on the part of the taxpayers. The finding will also enable me to make recommendations that will bring about modification if necessary, that will strengthen the machinery for the administration of VAT and also to its acceptance by the public.




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