Effects Of Value Added Tax (VAT) On Industries

INTRODUCTION
1.1 GENERAL BACKGROUND OF THE SUBJECT MATTER
This research work on the effort of Value Added Tax on the Nigeria economy is an evaluation and digestion of the newly introduced system of taxation with insight view on the general nature of VAT as applied to Nigeria industries the problems and prospect. This is a result of the narrow nature of VAT and the newness of the system in our economy.
The term Value Added Tax (VAT) was established by Decree 102 of 1993. According to the Decree. It is to be administered and monitored by the federal in card revenue services (FIRS).
By implication VAT is a replacement of the existing sale tax which has been in operation under Decree No 7 of 1986.
According tot eh information circular No 93 of 20th August 1993, published by Federal Inland Revenue services, VAT is a tax on spending”. The tax is borne by the final consumers of goods and services because it is included in the price paid. It was designed to reduce certain anomalies in the Nigeria tax system and also to insure certain growth by increasing the rate of savings and investments. The idea of introducing VAT in Nigeria came from the report of study group set up by Federal Government in 1991, to review the entire tax system.
However, this introduction was welcome with both hands by some sectors like the ministry of finance, while some sectors frowned at it for instance, the manufacturing Association of Nigeria (MAN) among other while some sector remained in different about this introduction.

1.2 PROBLEM ASSOCIATED WITH THE SUBJECT MATTER
The introduction of Value Added Tax in Nigeria, Tax system poses a lot of questions in the inquisitive mind of some people as to the “Why and How’ of the introduction. This brings about reaction form various sectors of the economy. These reactions are the problems this research work is young to address it to.

1.3 STATEMENT OF THE PROBLEMS
Problem arose as to whose and how to collected data (Taxation begum a very sensitive issued).
i. Value Added Tax increased the selling price of goods because the tax had been incorporated in the price. Buyers no longer buy because of increased price.
ii. We know that the Value Added Tax was a tax unconsciously paid when one bought a commodity. In facts, the incidence of VAT TAX falls on the final consumer.
iii. VAT was paid as a parts of money used to procured something of valued people that earns higher bought more goods that people of how income
iv. Most taxpayers found it very difficult to responded to questions correctly because they are not happy.

1.4 OBJECTIVES OF THE STUDY
Based on the statements of problems of this study, he writer intends to t-ray the following issued as to the inquisitive minds of the public reason for the introduction of VAT to replace sales tax.
i. To examined the reactions of the entire public as represented by the various sectors of the economy to VAT
ii. To t-ray the problems and prospects of VAT
iii. The claims of social and economy group, reaffirming the contemporary belief that enterprises do not exist for the some fit of the proprietors only, but for the society at large.

1.5 SIGNIFICANCE OF THE STUDY
The significance of the study is to achieve a great success in contributing the little; the research recommendation can, if not a great deal in solving the problem of Value Added Tax on the profitability of business organization which I believe in turn will bring about an increased profited value to economy.
It is as well hoped that his research will also bring to the notice of the government what the effect of value added tax on economy does to the general.

1.6 RESEARCH QUESTION
1. To what extent do you think Value Added effect the profitability of the organization?
2. Do you think taxpayer will offended the law arranges his affairs in such a way that he pays little or no tax?
3. How does VAT benefit the government?
4. How important do you think VAT is to government?

1.7 SCOPE OF STUDY
In project of this nature, one would like to accumulate data from many areas. But, in view of length of time allowed such a wide range sample study was difficult.
Therefore, I concentrated my field work in Enugu. The choice of Enugu was based on the time factor allowed and upon practical consideration including. The fact that I know much tax revenue office Enugu Urban.