Inyiama, oliver ikechukwu, ubesie, madubuko cyril department of accountancy, enugu state university of science and technology, enugu state, nigeria abstract. Value added tax vat is a consumption tax that is being charged and embraced by many developed and developing countries, which is relatively easy to administer and very difficult to evade. Impact of value added tax on economic growth of nigeria. An evaluation of value added tax by vat decree 102 of 1993 as a source of revenue to the federal government is important to both the government and the nigerian public. The effect of value added tax vat in the economic development of nigeria a case study of federal inland revenue service firs abuja abstract value added tax vat have tremendous roles to play in the academic development of the studies have shown that an increase in the number and variety of value added tax plus. The gross domestic product gdp in nigeria was worth 410 billion us dollars in 2019, according to official data from the world bank and projections from trading economics. However, a significant share of the increase in tax revenue in. Most researchers have not bothered to enquire into the extent to which value added tax supports or contributes to economic growth in nigeria ofishe, 2015. Unegbu 1 and david irefin 2 1accounting faculty, american university of nigeria, nigeria. Value added tax and economic development in nigeria madugba. Value added tax and economic development in nigeria madugba, joseph ugochukwu1 joseph,u.
Vat revenue impacted on economic growth in nigeria positively during the period of study. Value added tax vat is a consumption tax that is being charged. The aim was to increase the revenue base of government and make funds available for developmental purposes that will accelerate economic growth. Using household survey data to grasp the effect of value added tax on, social and economic life of the populace. Impact of vat on economic development of emerging nations angus o. Tax structure and economic growth in nigeria publish. Value added tax vat was introduced by the federal government of nigeria in 1993 to replace sales tax. Value added tax vat, economic growth gdp, total revenue. The administration of vat is relatively easy, unselective and difficult to evade. The impact of value added tax on revenue generation in nigeria. This study focused on value added tax vat and economic growth in nigeria. Uniprojects aim of providing impact of value added tax on nigerian economic growth project research material is to reduce the stress of moving from one school library to another all in the name of searching for impact of value added tax on nigerian economic growth research materials. Value added tax, economic growth, gross domestic product gdp, other government revenue.
Pdf the study examined the effect of value added tax vat on economic growth in nigeria in the period 19942016. Evaluating the impact of value added tax on the economic growth of. Vat is charged on most goods and services provides in nigeria and also on goods imported into nigeria. Imperative for reform value added tax vat is a consumption tax that is being charged and embraced by many developed and developing countries, which is relatively easy to administer and very difficult to evade. Ordinary least square techniques was used to estimate the model, which reveals a strong positive significant impact of vat on economic growth in nigeria. Impact of value added tax on nigerian economic growth project material. Company income tax act cita cap c21 lfn 2004, section 9 defines companies income tax as tax payable on. The impact of tax revenue on nigerian economy case of federal board of inland revenue matthew a. Pdf the study empirically examines the effect of value added tax vat on nigeria economy, in line with the objectives of this study.
The impact of value added tax on economic growth in nigeria. However, the positive but weak relationship that the value added tax vat bears with economic growth is an indication that the introduction of vat in changing the tax structure in nigeria has potentials for positively impacting on economic growth in nigeria. Company income tax and value added tax provide almost 80% of the revenue collection of advanced nations of the world, which much attentionis not focused on by the agencies responsible for tax in nigeria. Accepted 27 june, 2011 this paper on the impact of value added tax vat on economic and human developments of emerging. Examining the link find, read and cite all the research you need on.
The study is aimed at the appraisal of revenue generation in nigeria. The impact of taxation on economic growth in south africa. Value added tax and economic growth in nigeria semantic. This study is aimed at empirically analyzing the impact of value added tax vat on economic growth gdp in nigeria from 1998 2016. This study examined the impact of etaxation on nigerias revenue and economic growth. Value added tax in nigeria how to calculate vatable. It also investigates the impact of value added tax on economic development. In the same vein, zaman, okasha, and iqbal, 2012 examine the impact of value added tax in pakistans economy. Value added tax and economic growth in nigeria research and.
In these studies, researchers used economic development and economic growth interchangeably. Value added tax vat is a consumption tax that is being charged and embraced by many developed and developing countries, which is relatively easy to administer. Several studies pertaining to tax reforms in nigeria have tied tax reform on economic growth undermining public generated revenue. Assessment of value added tax on the growth and development of. The paper also recommended that value added tax vat act should be amended based on destination principle to impose vat on imported services rendered outside nigeria by a nonresident company. A cointegration of value added tax and economic growth in nigeria. Evidence from the study supports the existence of a longrun cointegration relationship between value added tax and economic development. At this stage, however, there is little agreement about federal reserve board, washington. Because increases in tax revenue including value added tax signifies that more revenue is available for economic growth. This research work studied the impact of value added tax on revenue generation in nigeria. The objective of this study is to determine the extent to which value added tax has affected the nigerian economy. He argued that an increase in the rate of value added tax will affect the countrys revenue base.
Some researchers estimated the effect of tax revenue on the economic development of nigeria using gross domestic product gdp. The impact of taxation as an aid to economic development includes abstract and chapter one, complete project material available the impact of taxation as an aid to economic development in edo state a case study of oredo local government area, edo state, nigeria proposal the research work will discuss in. Value added tax levied at each stage on value added in the economic chain of supply and it is a constant rate. For analysing the data, the gmm panel was employed because of the structure of the model. Get free research paper on value added tax in nigeria.
At that tax rate, the economic growth rate would be around 6% and 8%. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in. The study examines the effect of value added tax and customs and excise duties on nigeria economic growth. It has been the general belief that taxation is used by government to raise funds. A valueadded tax vat, known in some countries as a goods and services tax gst, is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destinationbased tax, where the tax rate is based on the location of the customer. Vat as a tax has contributed immensely on the economic growth of nigeria. This has had a severely limiting impact on economic growth and creation of an enabling framework for investments. Econometric analysis of the impact of value added tax. Abstract this study examined the impact of vat on economic growth in nigeria. O ezejiofor raymondeffect of value added tax on the nigerian economy european academic research vol. Nigerias domestic revenue mobilization has been one of the lowest in the world. Uniprojects aim of providing impact of value added tax on nigerian economic growth project research material is to reduce the stress of moving from one school library to another all in the. The study focuses on the impact of petroleum profit tax, company income tax, personal income tax, value added tax revenue on nigerias economic growth between 1980 and 20. Specifically, the study examined the perception of the vat payers on value added tax since inception of vat in nigeria, assesses the impact of adequate accounting.
Value added tax vat is a consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service. Data was collected from central bank of nigeria cbn statistical bulletin. The roles of value added tax in the economic growth of nigeria. Effect of value added tax, customs and excise duties on nigeria economic growth dr. Against this back drop, this paper is designed to examine the influence of tax reforms, beginning with the introduction of valueadded tax vat. Jul 04, 2015 adereti, sanni, and adesina 2011, in analyzing value added tax and economic growth of nigeria, used time series data on the gross domestic product gdp, vat revenue, total tax revenue and total. Value added tax vat in nigeria is a consumption tax that was instated by the value added tax act of 1993. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1. Assessment of value added tax on the growth and development. Learn more about the nigeria economy, including the population of nigeria, gdp, facts, trade, business, inflation and other data and analysis on its economy from the. In order to meet its revenue target, government intends to broaden the tax net, enhance the effectiveness of revenue collection.
The starting point of conventional economic growth theorisation is the neoclassical model of solow 1956. This page provides nigeria sales tax rate actual values, historical data, forecast, chart, statistics, economic calendar and news. A lot of literature exists on tax revenue and economic growth of nigeria adereti et al. Econometric analysis of the impact of value added tax on economic growth in nigeria ezeji e. A cointegration of value added tax and economic growth in. The effect of value add tax on economic growth and its. May 06, 2017 this paper analyzed empirically the impact of value added tax vat on economic growth in nigeria from 19942010. The study examined the impact of tax revenue on the nigerian economy.
Pdf value added tax and economic growth of nigeria. In this study, the effect of value added tax on economic growth was examined especially on the developing countries. The importance, how to, effect causes relationship, comparison, history, role, solutions are discussed. Value added tax vat and economic development in nigeria using the autoregressive distributed lagged ardlbounds testing approach. It employed time series survey of data covering a lapse period of twenty years 199420. The fall in oil prices had exposed the hollowness of the unsustainable economic growth model. Over the years value added tax vat as a form of indirect tax was introduced in france in 1954. The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. Please, sit back and study the below research material carefully. Economic growth is the growth of an economys output of goods and services which is sometimes reffered to as the gross national product gnp growth. Phddepartment of financial management, school of management technology, federal university of technology, owerri, nigeria abstract this paper examines the impact of value added tax on the economic growth of nigeria.
Ezejiofor raymondeffect of value added tax on the nigerian economy european academic research vol. It is a federal tax which is managed by the federal inland revenue service firs. Tax is a major fiscal policy employed by every nation of the world to generate revenue to implement developmental activities and stimulate the economy towards growth. Evaluating the impact of value added tax on the economic. Growth was petering out and the country was facing stag. Chigbu, peter ifeanyichukwu ali department of financial management technology, federal university of technology owerri, imo state, nigeria email of corresponding author. Specifically, the study sought to exa mine the impact of value added tax on economic growth in nigeria, assess the significant relationship between companies inc ome tax and economic growth in. The results suggest that the growth maximizing tax rate is about 15% of per capita gdp for south africa and 30% for nigeria. Pdf effect of value added tax on the nigerian economy. But the role of taxation goes further than promoting economic growth. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the study empirically examined how the implementation of etaxation in 2015 has affected tax revenue, federally collected revenue and taxtogdp ratio. A value added tax vat, known in some countries as a goods and services tax gst, is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destinationbased tax, where the tax rate is based on the location of the customer. Yakubu and jibril 20 investigated the relative impact of value added tax on economic growth in nigeria. This study explored the impact of vat on economic growth in nigeria using empirical studies.
According to the organisation for economic cooperation and development oecds revenue statistics in africa 2019 report, nigerias taxtogross. Impact of value added tax on nigerian economic growth. The study sets out to investigate the effects of value added tax vat on economic growth gdp and total tax revenue in nigeria. Value added tax and economic growth in nigeria john. Pdf value added tax and economic development in nigeria. Data were sourced from central bank statistical bulletin and. This paper attempts to examine the relationship between value added tax and economic development. Oct 23, 2014 this research work studied the impact of value added tax on revenue generation in nigeria.
The impact of value added tax on nigerian economic growth 19942012. In details, the effects of vat on the economic growth of 19 developing countries for duration of 1995 to 2010 were investigated. Pdf on may 1, 2016, kizito uyi ehigiamusoe and others published value added tax and economic development in nigeria. Ex post facto research design was adopted for this study. Azubike1 michael okpara university of agriculture umudike umuahia abia state nigeria. Effect of value added tax, customs and excise duties on. V, issue 2 may 2017 1188 countries including nigeria. Data were sourced from central bank statistical bulletin and extracted through desk. Secondary data were used in this study, the data were collected from cbn statistical bulletin also gathered from journals and textbook that is related to the research topic, the study.
Impact of vat on economic development of emerging nations. Value added tax and economic growth in nigeria semantic scholar. The study period spans economic cycles for about 66 percent of the life of. The paper empirically examined the contribution of vat to the development of the nigerian economy. Against this back drop, this paper is designed to examine the influence of tax reforms, beginning with the introduction of value added tax vat. To further boost government revenue generation in nigeria value added tax vat was introduced by act no. The impact of value added tax on nigerian economic growth. Assessment of value added tax on the growth and development of nigeria economy.
This study focused on value added tax vat and economic growth in. The result shows that vat contributes significantly to the total tax revenue of government and by extension the economic growth of nigeria. The study is therefore limited to the core economic growth in nigeria and not the socio political factors of the foreign exchange rate. Excluding nigeria and south africa, government revenue as a share of gdp rose even more in the continent, increasing from an average of 18. Value added tax and economic development in nigeria. Value added tax and economic growth in nigeria john chika. The gross domestic product of south africa by 2012 was 77% larger in real terms relative to 1994, with the corresponding rise for the global economy having been 90%. Impact of etaxation on nigerias revenue and economic growth. The study is based on value added tax on nigeria economy with its impact on economic growth in the country. The study examined the effect of value added tax vat on economic growth in nigeria in the period 19942016. The roles of value added tax in the economic growth of. Department of accounting and finance faculty of management sciences, lagos state university, lagos, nigeria eaddress. The research used ordinary least squares ols and granger causality technique using. Relevant data were collected from central bank of nigeria cbn statistical bulletin and.
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