Impact of Value Added Tax on the Nigerian Economy:A Discriptive Analysis

Abstract

The research study has been able to find out that VAT is at a flat rate of 5% of the seller’s price. The proceeds from VAT nation-wide is payable into a common VAT account in the Central Bank of Nigeria from where it is to be distributed to all the three tiers of government (federal, state and local government) on an agreed formula.The tax is also very progressive in nature, the more you consume, the more tax you pay. Since tax is tied to consumption, it helps to rationalize the consumption pattern of the society. Value Added Tax affects the masses. Here, it was observed in the course of this study that VAT affects the goods consume and the services rendered to the consumers (masses). Moreover, the Decree that established VAT makes no exemption for pretty traders. All transactions involving the specified goods and services are subjected to the tax irrespective of how small any transaction could be. The federal government allocation would be used to provide social amenities like roads, adequate public transportation. The VAT decree states the offences and penalties relating to VAT .However ,literature from the archives were used to project current strategic implications. Some of the act that constitutes offences include, tax evasion, failure to make tax returns to issued invoices, failure to notify the tax authority about change of address, failure to register with tax authority, failure to keep proper records and accounts etc. All these have different penalties attached to them.

Keywords :Government Policies,  Revenue earning ,Provision of amenities, Equitable distribution and Progressive nature