Contributions of Vat to Revenue of Goverments of Nigeria

Contributions of value added tax (vat) to government revenue in Nigeria

Paul O. Yabugbe B. Sc. M. Sc. FCA,

Felix Olurankinse B. Sc. M. Sc. ACA, and

Robert W. Odewale B. Sc. M. Sc. ACA
GSM:                 08035777556
Lecturers in Department of Accounting
Adekunle Ajasin University,
Ondo State, Nigeria.

      Government’s revenue drive has been on the increase as a result of its increasing responsibilities to the citizenry and the desire not to rely on oil alone as the major source of revenue.   Prior to 1994, sales tax was in operation in Nigeria and was administered by the various State Governments.   In order to have a central distributable pool of funds to all the three tiers of government the Federal Military Government enacted and gazetted The Value Added Tax Decree No. 102 (The Principal Decree) in 1993 and came into effect from January 1, 1994.   It thus serves as a replacement for sales tax.   Since its introduction VAT has become a major source of revenue to the three tiers of government.   This paper examines the impact of Value Added Tax (VAT) as a source of income to the three tiers of Government using the Federal, Ondo State, and Ilaje Local governments as case studies.   The methodology employed involved the use of secondary data obtained and analyzed using simple statistical tools from which deductive conclusions were made.   The results and findings revealed that VAT is an assured and reliable source of income such that at the Local Government level, it constitutes one-third of Total income yearly. The problems associated with its administration and collection is mainly “Tax Evasion” and “Tax Avoidance”. This study recommends that the intensification of VAT inspection to ensure compliance would reduce the problems to the barest minimum.

1. Introduction
VAT has become in recent times an important source of revenue for the three tiers...