ABSTRACT

The study examined the impact of value added tax on the Nigerian economy. The data used was secondary data, sourced from Federal Inland Revenue Service (FIRS) and Central Bank of Nigeria statistical bulletin. Multiple regression of ordinary least square (OLS) method of analysis was used. The result from the study revealed the following: that value-added tax had positive and significant impact on gross domestic product in Nigeria, while petroleum profit tax had negative and insignificant impact on gross domestic product in Nigeria.  The study therefore concludes that value added tax had positive and significant impact on the Nigerian economy which is in line with Ibu Khaldun’s theory of taxation which recognizes the positive impact of value-added tax on the economy, hence the study recommends the following: that government should sustain value added tax and administrative loopholes should be covered for VAT revenue to continue to contribute more positively and significantly on the Nigerian economy. This implies that government should ensure the accountability and transparency in the management of VAT revenue, and that as a matter of urgency government should arrest the insecurity situation in the Niger Delta areas and the country at large to avoid pipe line vandalization and illegal refineries and government should create an enabling environment for the relocated oil companies to come back to Nigeria in order to boost oil production in the country and the increase on revenue that will accrue from petroleum profit tax.

TABLE OF CONTENTS

Title i

Declaration ii

Certification iii

Dedication iv

Acknowledgments v

Table of contents vi

List of tables viii

Abstract ix

CHAPTER ONE: INTRODUCTION 1

1.1 Background to the Study 1

1.2 Statement of the Problem 3

1.3 Objectives of the Study 4

1.4 Research Questions 4

1.5 Research Hypotheses 5

1.6 Scope of the Study 5

1.7 Significance of the Study 5

CHAPTER TWO: REVIEW OF RELATED LITERATURE 7

2.1 Conceptual Framework 7

2.1.1 Concept of Tax 7

2.1.2 Forms of Taxes 8

2.1.3 Definition and Concepts of Value Added Tax (VAT) 9

2.1.4 Aims of VAT in Nigeria 10

2.1.5 Different types of valued added tax (VAT) 11

2.1.6 Value Added Tax in Nigeria 12

2.1.7 Administration of VAT in Nigeria 14

2.1.8 Value Added Tax in Nigeria 15

2.1.9 Value Added Tax and its Challenges 16

2.1.10 The Impact of value added tax on Nigerian economy 17

2.2 Theoretical Framework 19

2.3 Empirical Review 24

CHAPTER THREE: RESEARCH METHODOLOGY 30

3.1 Research Design 30

3.2 Nature and Source of Data 30

3.3 Model Specification 30

3.4 Techniques of Analysis 31

3.5 Decision Rule 31

3.6 Description of Variables 31

3.6.1 Dependent Variable: 31

3.6.2 Independent Variable: 32

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS 33

4.1 Data presentation 33

4.2 Regression Analysis and interpretation of Result 34

4.3 Test of Hypotheses 34

4.4 Discussion of findings 36

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS 38

5.1 Summary of Findings 38

5.2 Conclusion 38

5.3 Recommendations 38

REFERENCES 40