A FRESH LOOK AT VALUE ADDED TAX ENFORCEMENT AND COMPLIANCE IN NIGERIA

Abstract

Tax, generally, is structured for revenue generation. It is a system of raising money for the purpose of governance by means of contributions from individual persons or corporate bodies. Most countries of the world have a tax system in place in order to pay for public, common societal or agreed national needs and for the functions of government. Tax is the cost of the social contract made between the government and those it governs for the provision of public services. Value Added Tax which is a type of tax that has surprisingly gained global acceptance and practice, is a levy imposed on consumption. It is charged between business throughout the production and distribution chain. Whenever value is realized and added, or a sale is made, Value Added Tax is always charged and remitted to the government. The very person who bears the burden of Value Added Tax is not the same as the one who remits the tax eventually to the government. Since its introduction in Nigeria in 1993, Value Added Tax has been a strong source of revenue to the government. In year 2020 for instance, the tax generated 1.53 trillion naira. Nevertheless, Nigeria would have been making more from the tax but for the issues of compliance and enforcement. Flowing from the above therefore, this study seeks to revisit and examine Value Added Tax compliance and enforcement in Nigeria. The methodology employed in the research is doctrinal, and the approaches adopted are narrative, analytical, and descriptive. Data were obtained from both primary and secondary sources. Findings reveal among other things that poor utilization of VAT revenue by government, low per capital income of taxpayers, inadequate use of technology etc are some of the reasons for poor VAT compliance in Nigeria. The research ends with recommendations centred on proper utilization of VAT revenue by government, quick refund to tax claims as well as improved use of technology.