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Countries seeking to improve its revenue generation would opt for a concept enabling it to best realize its objective with due regards to its peculiar socio-economic make-up, one of the way is by taxation.

Value Added Tax (VAT) was first introduced in France in 1954; it has been embraced by well over seventy countries all over the world. Japan, Canada, the state of Michigan and many African countries.

According to the federal revenue service (FIRS), the idea of introducing VAT in Nigeria originated from the report of a study group set up by the federal government in 1991 to review the entire tax system. Subsequently, a committee as set up to carry out feasibility studies of its implementation. It should be noted that the committee was not requested to carry out any analysis of the impact of the tax, neither was there any active debate among the various interest group such as the organized private sector, labour unions and academic as well as other professionals, through which certain aspect of the impact might have been considered and taken into account in its design and implementation.

Eventually, government agreed to introduce VAT but the actual implementation did not commence until January 1994 after the promulgation of the value added tax decree No. 102 of 1993. According to the decree, a vatable organization is an existing manufacturer distributor, importer or supplier of goods and service.

Firstly, value added tax is a single rate (5%) tax which makes it easier to administer. Secondly it adopts the input – output tax mechanism, which makes itself policing specifically, although it is a multiple stage tax, it is expected to have a single stage tax on consumers price and should not add more than the specified rate to the consumers price no matter the number or stage at which the tax is paid. In essence, it is the official view that the VAT should not be cascading what so ever since the tax liability of on output and VAT on inputs. In other words, the credit method of connection should eliminate any cascading effects.

It should be clear that the Nigerian VAT is a replacement of the sale tax which had been in operation under the federal government legislated decree No. 7 of 1986 which had a narrow base and discriminated against locally produced goods and services as it exclude import. The sale tax revenue accrued exclusively to the state government, while the VAT revenue is now shared by all level of government. As such it can be assumed that the VAT revenue is not sterilized but injected through increased government finance consumption expenditure.

Moreover, VAT is paid on virtually all goods and services but the credit system implies that VAT revenue received by government should be devoid of any cascading.

Value Added Tax is a consumption tax levied in value of goods and services in value in the cause of their production or supply (Anyanaduba: 1999). Value Added Tax is tax on the supply of goods and services which government reasoned it will be virtually impossible to avoid tax (Ama, 2000).


As a result of the uncommon nature of VAT system, there are some problems relating to Value Added Tax system. These problems could seen as follows.

What is the effectiveness of VAT administration?

What is the assessment of the public as to effectiveness of VAT.?

What is the degree of performance of VAT.?


1.The objective of this research work is to find out the effectiveness of the administration of VAT improving government revenue.

2.To find out our conduct a public opinion on the performance of VAT.

3.To establish the degree of performance of VAT in comparison to other indirect tax administration FIRS.


The research covers and concentrates on the performance appraisal of value added tax in Nigeria’s economy (the federal, state and local government) of some selected tax payer companies. The time frame covered is from 2000 to 2011. This time frame is particularly important because much emphasis is been laid on improving on ways to generate revenue for the three tiers of government to provide service for the citizen of Nigeria.


It is hoped that this research work will be fundamental significance to the government of Nigeria. It is important to Nigeria who are totally or partially ignorant of the concept of VAT as a source of taxation and its operational machinery. It is significant to the Nigeria businessmen because it will help non-VAtable item.

It will be of immense importance to federal Inland Revenue Services Officers who are daily on need of constructive criticism that will enhance their performance. To those categories of people mentioned above this research work will provide additional information on VAT and gear them into oriented behavior of intensive revenue drive.


The question is has value added tax in Nigeria actually achieved its predetermined objective of the generating revenue? Hence we should direct the thrust of this research work to answer this question in the number of hypothesis as follows:

1.H0:The introduction of VAT to Nigeria economy is not necessary and sound in principle

H1:The introduction of VAT in Nigerian economy is necessary and sound in principle

2.H0:VAT strategies implementation in Nigeria should not be improved.

H1:VAT strategies implementation in Nigeria should be improved.

3.H0:VAT has not had much significant impact on the Nigerian economy.

H1:VAT has had much significant impact on the Nigerian economy.


This analytical research work will be based on the assessment of the VAT by the respondent groups with a narrow segment of the Nigeria population business organization and civil servants difference.

This may be attributed to size of the population from which our sample was drawn. The research work is restricted to Benin City capital of Edo state.


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