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COMPARATIVE ANALYSIS OF VALUE ADDED TAX REVENUE AMONG DIFFERENT SECTOR IN NIGERIA: CASE STUDY OF FEDERAL INLAND REVENUE LAGOS STATE

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

According to Oserogho and Associates as quoted by Adereli, Sannid Adesina (2011), VAT is a consumption tax levied at each stage of the consumption chain and borne by the final consumer of the product or service. Each person is required to change and collect VAT at a flat rate of 50% on all invoice amount on all goods and services not exempted from paying VAT, under the Value Added Tax Act 193 as amended. Where the VAT collected on behalf of the government (output VAT) in a particular month is more than the VAT paid to other persons (input VAT) in the same month, the difference is required to be remitted to the government, on a monthly basis by the taxable person where the reverse is the case, the tax payer is entitled to a refund of the excess VAT paid or more practically to receive a tax credit of the excess VAT from the government. All exports are zero rated for VAT, i.e. no VAT is payable on exports. Also VAT is payable in the currently of the transaction under which goods and services or services are exchanged. The precedence for the introduction of VAT in Nigeria was based on the fact that taxation as an instrument of fiscal policy is vital in generating revenue to finance the activities of government, redistribute income, stabilize the economy as well as stimulate growth and development. The research intends to investigate the performance of different sectors in the Nigerian economy in contributing to VAT revenue using Lagos State Federal Inland Revenue as a case study. 
1.2  STATEMENT OF THE PROBLEM 
VAT was introduced to contribute to economic growth of the nation by providing revenue to government to accelerate development. However, this goods is still far from being achieved sector contributions to VAT revenue is pivoted to providing the needed revenue to government to impact on economic growth. Hence, the problem confronting this research is to provide a comparative analysis of Value Added Tax Revenue among different sectors in Nigeria with a case study of Federal Inland Revenue Service of Lagos State. 
1.3   Research Questions 
1. What is the nature of tax and its significance? 
2. What is the nature of value Added Tax?
3. What are the sectoral contributions of Value Added Tax Revenue?
4. What constitute the sectoral analysis of VAT in Lagos State? 
1.4  OBJECTIVE OF THE STUDY 
1. To determine the nature and significance of tax 
2. To appraise the nature of Value Added Tax and the significance 
3. To determine the sectoral contributions of Value Added Tax revenue in Lagos State. 
1.5  SIGNIFICANCE OF THE STUDY 
1. The Study shall provide sectoral analysis of contributions of Value Added Tax with a view to providing measures and policies to maximizes Value Added Tax revenue in Nigeria 
2. The study shall serve as reference point of information for economist, accountants, managers and government on issues regards Value Added Tax Revenue in Nigeria.
1.6  STATEMENT OF HYPOTHESIS 
1. H0 VAT is not significant to economic growth in Nigeria 
H1 VAT is significant to economic Growth in Nigeria 
2. H0 The impact of VAT on government Revenue is low
H1 The impact of VAT on government Revenue is High 
3. H0 Sectoral contributions to VAT in Lagos State is low 
H1 Sectoral contributions to VAT in Lagos State is high 
1.7  SCOPE OF THE STUDY
The study focuses on the comparative analysis of value added tax revenue among different sectors in Nigeria with a case study of Federal Inland Revenue of Lagos State. 
1.8  DEFINITION OF TERMS
Definition of VAT VAT is a consumption tax levied at each stage of the consumption chain and borne by the final consumer of the product or service. Oserogho and Associates (2011).

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