This act empowered the federal government to fix the rate of value added taxes to be imposed in nigeria. The tax sha\l be computed at the rate ofs per cent on the value of all gmd and. Nigerias taxtogross domestic product gdp in 2017 was 5. Changes and effects are recorded by our editorial team in lists which can be. Value added tax in nigeria how to calculate vatable. C 21 lfn 2004 as updated to may 2007 and section 15 of value added tax act vata cap. Thank you for reading this post, if you have found it useful please share. The value added tax vat in nigeria is tax payable on goods and services consumed by any person, whether government agencies, business organization or individuals. Vat is charged on most goods and services provides in nigeria and also on goods imported into nigeria.
This was a moderate increase from the figures reported in 2016 5. Assessments of value added tax vat administration in guraghe zone revenue authority article pdf available in research journal of finance and accounting 1007. Thank you for reading this post, if you have found it useful please share with your network using one of the share buttons below. Substitute for the words vat office the words tax office wherever they occur in the principal act. However the vat is expected to have application in situations where supplies are made by statutory or local authorities which are equivalent or similar to those supplied by taxable. Vat is charged on most goods and services provides in. This paper examined tax reforms in nigeria with respect to value added tax vat. Changes and effects are recorded by our editorial team in lists which can be found in the changes. Vat is administered by the federal inland revenue service firs. Value added tax and economic development in nigeria madugba. The value added tax act, 2014 arrangement of sections section title part i preliminary provisions 1. Value added tax and economic growth in nigeria john chika. Nigerian company toa person outside nigeria imported service. S 1, 7, 1618, 2021, 34, 41, 44, 55, 5859, 67, 69, 76, sch 12.
Substitute for section 4 of the principal act a new section 4 rate of tax 4. Value added tax vat in nigeria is a consumption tax that was instated by the value added tax act of 1993. Section 81 of the company income tax act or section of the value added tax act. The federal government of nigeria introduced value added tax by virtue of decree no. It was introduced into the nigeria tax system through vat decree no 102 of 1993 which repealed the sales act of 1986 and it became effective 1 january 1994. Nigeria introduced value added tax in december 1993. In the same vein, zaman, okasha, and iqbal, 2012 examine the impact of value added tax in pakistans economy.
Revised legislation carried on this site may not be fully up to date. Value added tax act 1994 is up to date with all changes known to be in force on or before 18 february 2020. Petroleum profits tax act an act to impose a tax upon profits from the winning of petroleum in nigeria, to provide for the assessment and collection thereof and for purposes connected therewith. The value added tax act in this act referred to as the principal act is amended as set out. Pdf assessments of value added tax vat administration. Passed by parliament and assented to by the president. The paper also looks at the adoption of vat in other federal states and how the states have been able to. An act of parliament to impose a tax to be known as value added tax on goods delivered in, or imported into kenya. The main purpose of wht is to capture as much tax payers that may have evaded tax into the tax net and the rate is usually 5%10% depending on the type of transaction. Import vat is administered and collected by the customs services. The two executive orders are the value added tax act modification order. The act imposes vat on the supply of all taxable good and services, including imports.
Current issues on value added tax vat law and practice. Value added tax vat is administered in nigeria by the federal inland revenue service firs through the vat directorate abuja. Tax provisions in finance act, 2020 kpmg united states. Vat was proposed and a committee was set up to carry out feasibility studies on its implementation. Summary of recommendations on the position paper on the value added tax vat presented by the chartered institute of taxation of nigeria citn to the national assembly public hearing on tax bills, december, 2005. The nigerian federal government enacted the vat amendment act in 2007. Vat which to some extent throw light on some of the provisions. University of lagos, nigeria abstract the value added tax vat was introduced in nigeria in 1993 by the federal military government. Prior to the finance act, 2020, a nonresident company was only subject to tax in nigeria if it had a fixed base in nigeria and the taxable profit was the profit attributable to that fixed base. Refers to unearned income which accrues to the owner from past endeavors. Vat is a consumption tax payable on the goods and service consumed by any person whether government agencies, business organizations or individuals.
Vat is a tax levied on the supply of taxable goods and services. The act stipulates that vat shall be chargeable and payable on the supply of. Vat was proposed and a committee was set up to carry out. C21 lfn 2004 as updated on profits exempted in respect of. The valueadded tax vat is administered by the federal inland revenue service firs in abuja. The value added tax amendment act, 2007 the act is the principal legislation which dictates the application of value added tax vat to certain goods and services in nigeria. Part ii imposition of value added tax a imposition and exemptions 3. In other words, the nexus for taxing profits derived by a foreign company in nigeria previously was based on its physical presence in nigeria. The value added tax vat administration in nigeria and the.
I certify, in accordance with section 2 1 of the acts authentication act, cap. Ghanas parliament has enacted the value added tax amendment act, 2017 act 948 to amend the value added tax act, 20 act 870. Since then, the value added tax decree, had been amended more than half a dozen times the latest being the value added tax amendment act of 2007. Taxes and levies approved list for collection act cap t2 lfn, 2004 value added tax vat. The circular also relates to section 231 of companies income tax act cita cap. You can read the full provisions of the law here value added tax act. Value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of commencement of business. Pdf nigerian value added tax system and the concept of. Aug 07, 20 overview of the value added tax vat act the vat act cap v1, laws of the federation of nigeria lfn as published in the laws of the federation of nigeria, 2004 edition, is the legal basis for the imposition and operation of vat in nigeria.
The jurisdiction of vat lies with the federal government of nigeria and the proceeds from vat are distributed among the three tiers of. Amended by valueadded tax amendment act 61 of 1993. In order to meet its revenue target, government intends to broaden the tax net, enhance the effectiveness of revenue collection. Value added tax act, 20 an act to revise and consolidate the law relating to the imposition of the value added tax and to provide for related matters. On the issue of value added tax vat, the loudest noise is the amendment of the value added tax act by the finance act which raised the vat rate from 5% to 7. Highlights of value added tax amendment act, 2017 act 948.
This act may be cited as the value added tax amendment act, 2007. The rules for compliance and returns are contained within the vat act 1993. Pdf nigerian value added tax system and the concept of basic. Pdf assessments of value added tax vat administration in. Value added tax act, 2014 c value added tax act, 2014 an act to provide for the imposition assessment and collection of value added tax on the supply and importation of goods and services in the bahamas and for connected matters enacted by the parliament of the bahamas part i preliminary 1. The target of vat is consumption of goods and services and unless an item is specifically exempted by law, the consumer is liable to the tax. Nigeria is a member of the economic community of west african states member trading bloc, which may affect international vat collection and regulations. Recent amendments to the vat act were in 2007 and 2012 respectively. The value added tax vat was introduced in nigeria in. Appeals shall be as in the federal inland revenue service act. It is a federal tax which is managed by the federal inland revenue service firs. Value added tax 7 issue 1 chapter 476 value added tax act date of assent. The value added tax act 2014 the united republic of tanzania no.
The vat act cap v1, laws of the federation of nigeria lfn as published in the laws of the federation of nigeria, 2004 edition, is the legal basis for the imposition and operation of vat in nigeria. Amended by value added tax amendment act 61 of 1993. Discusses the fundamentals of a vat, its origin, the practice in nigeria as well as its shortcomings considering the presence of state sales tax. Nigerias general vat rate is 5%, with other rates including 0% that can apply to certain transactions. It highlighted the reasons for the replacement of sales tax with value added tax vat, yearly contributions of value added tax to the total revenue base of the nation and revealed that value added tax vat was designed to favour development at the lower tier level of government. In nigeria the companies or business organizations that function on a no profit making basis are required to pay value added taxes. The petroleum profit tax act ppta however exempts dividends payable by oil producing companies on petroleum operations from withholding tax imposition. Having now been passed by both arms of the national assembly, and thereafter assented to by the president, it is expected that its. Using household survey data to grasp the effect of value added tax on, social and economic life of the populace. V1 lfn 2004 as updated to may 2007 require all companies to file returns in prescribed forms. Value added tax vat is an indirect tax based on the consumption of some specified goods and services. Value added tax in nigeria the standard vat rate in nigeria is 5% invoice value of goods and services except.
Consequently, its application is provided for in the enabling law of other tax types i. The value added tax act originally consisted o f 42 sections and three schedules. Valueadded tax act 89 of 1991 south african government. For a deeper discussion, please contact any member of our team below or your usual contact within pwc nigeria. Substitute for section 4 of the principal act a new section rate or tax 4.
Value added tax and economic development in nigeria. It is a multistage levy on valueadded on each production or distribution stage of. The value added tax act in this act referred to as the principal act is amended as set out in this act. It is a multistage levy on value added on each production or distribution stage of a good or service. Highlights of value added tax amendment act, 2017 act. Contentious issues in value added tax act and administration in nigeria being paper presented at the citn mptp at ibadan on june 17, 20 introduction to vat in nigeria 2 nd edition jan 1993. Value added tax simply regarded as vat is the tax levied on the supply of goods and services which is eventually borne by the final consumer of that good or service but collected at each stage of the production and distribution line. Current law and practice of value added tax in nigeria. Withholding tax in nigeria administration and rates. They are neither binding on nor create estoppel against the firs.
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