Vat: Pay as You Spend
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VAT: Pay as you spend
Contributed by Ndako Worogi
Friday, 18 January 2008
Last Updated Friday, 18 January 2008
What do you know about value added tax? During the anti-VAT and fuel price protests at the inception of the
Yar’Adua administration, the acronym—‘VAT’ rent the air. But few people actually
knew/know what VAT represents. Ndako Worogi Edotsu painstakingly delves into the details of VAT and its
administration as a system of tax.
Value Added Tax (VAT) has been defined as a multistage consumption tax imposed on value added to goods as they
proceed through various stages of production and distribution and to services as they are rendered.
VAT was introduced in Nigeria by VAT Decree 102 of 1993, but came into effect on 1st January, 1994 and replaced
sales tax Decree of 1986. It is an indirect tax based on consumption, the incidence of which is borne by the final
consumer, value added tax (VAT) covers locally manufactured goods, imported goods, professional services, hospitality
as well as banking services. This tax is administered by the Federal Inland Revenue Service (FIRS) and charged at 5%
flat rate on goods and services.
Some goods and services are exempted from the value added tax. They include basic food items, baby products,
medical and pharmaceutical products, books and other educational materials, agricultural equipment, fertilizers and
veterinary medicines, commercial vehicles and their spare parts, newspapers and magazines, services of community,
peoples and mortgage banks, medical services rendered by private health institutions and all diplomatic items.
A vatable person is one who trades or transacts in vatable goods and services. Value added tax Act specifies that every
vatable person is obliged to register for value added tax. Therefore, all domestic manufacturers, wholesalers, distributors
and suppliers of goods and services are to register. Also, professionals like accountants, engineers, architects,...
Contributed by Ndako Worogi
Friday, 18 January 2008
Last Updated Friday, 18 January 2008
What do you know about value added tax? During the anti-VAT and fuel price protests at the inception of the
Yar’Adua administration, the acronym—‘VAT’ rent the air. But few people actually
knew/know what VAT represents. Ndako Worogi Edotsu painstakingly delves into the details of VAT and its
administration as a system of tax.
Value Added Tax (VAT) has been defined as a multistage consumption tax imposed on value added to goods as they
proceed through various stages of production and distribution and to services as they are rendered.
VAT was introduced in Nigeria by VAT Decree 102 of 1993, but came into effect on 1st January, 1994 and replaced
sales tax Decree of 1986. It is an indirect tax based on consumption, the incidence of which is borne by the final
consumer, value added tax (VAT) covers locally manufactured goods, imported goods, professional services, hospitality
as well as banking services. This tax is administered by the Federal Inland Revenue Service (FIRS) and charged at 5%
flat rate on goods and services.
Some goods and services are exempted from the value added tax. They include basic food items, baby products,
medical and pharmaceutical products, books and other educational materials, agricultural equipment, fertilizers and
veterinary medicines, commercial vehicles and their spare parts, newspapers and magazines, services of community,
peoples and mortgage banks, medical services rendered by private health institutions and all diplomatic items.
A vatable person is one who trades or transacts in vatable goods and services. Value added tax Act specifies that every
vatable person is obliged to register for value added tax. Therefore, all domestic manufacturers, wholesalers, distributors
and suppliers of goods and services are to register. Also, professionals like accountants, engineers, architects,...