value added tax (VAT)

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Effect of Value Added Tax on the Nigerian Economy

Effect of Value Added Tax on the Nigerian Economy

countries including Nigeria. Over the years Value Added Tax (VAT) as a form of indirect tax was introduced in France in 1954. From there it spread rapidly to other developed countries except to US where it has not been adopted to date. International Monetary Fund (IMF) was at the vanguard of spreading the concept to developing and transitional economies. Since VAT worked in the form of taxation that has turned out to be goldmine. As stated earlier it was introduced into Nigeria by Decree 102 of 1993 and started functioning in January 1994. Ajakaiye (1999) observed that VAT has become a major source of revenue in many Sub-Saharan flows into the government treasury. The reason is that poor people spend a large portion of their income on purchases some of which carry VAT. The general negative attitude on the part of citizen of the country towards paying tax, poses tax avoidance, under-utilized revenue from VAT unaccountability on the side of tax administrators, poor awareness of the issue of VAT by the public, ineffective administration and implementation of VAT, excessive dependence of imports, etc. It also becomes difficult to comply with VAT since it involves giving out a percentage of one‟s income to the government. More over in Nigeria the revenue from VAT is routinely shared out according to agreed percentages while not a lot of research has been done to determine the effects(s) of this new revenue source on some aspects of the economy. Though prior research revealed that VAT as a tax has contributed immensely on the economic growth of Nigeria. However, the recent economic recession to an extent has eaten up the economy.
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Changes in the Imposition of Value Added Tax in Lithuania (1994-2004)

Changes in the Imposition of Value Added Tax in Lithuania (1994-2004)

Since May 1, 2004 VAT object is not only supplying goods and providing services in the territory of the state and goods import (goods import from 01-05-2004 is con- sidered as importing goods from the territory other than the European Community), but also obtaining goods for payment from other member state (Brasiūnaitė, 2004). Obtaining goods is only such kind of obtaining goods when goods are taken from supplying member state and brought to other member state. Transporting goods in- side the EU from one member state to another they are taxed not as import, but as a certain special category, that is obtaining goods inside the EU. There are no temporary expenses paying import VAT and no time wasted for import procedures. However, having eliminated customs checks between the EU states, companies lost possibility to include into the account paid-in import VAT. So pur- chasing goods from the EU state and selling them in Lithuania it is necessary to pay bigger value added tax to the state. Purchaser gains profit only exporting goods to another member state. Freely circulating goods to other member states are transported without any export for- malities, formalizing only VAT invoice (Rimkevičiūtė, 2004). VAT rate of 0 per cent is imposed on export.
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The Distributional Effects of Value Added Tax in Ireland

The Distributional Effects of Value Added Tax in Ireland

Abstract: In this paper we examine the distributional effects of Value Added Tax (VAT) in Ireland. Using the 2004/2005 Household Budget Survey, we assess the amount of VAT that households pay as a proportion of weekly disposable income. We measure VAT payments by equivalised income decile, households of different composition and different household sizes. The current system is highly regressive. With the use of a micro-simulation model we also estimate the impact of changing the VAT rate on certain groups of items and the associated change in revenue. We also consider how the imposition of a flat rate across all goods and services would affect households in different categories. The Irish Government has recently announced that it proposes to increase the standard rate of VAT to 22% in 2013 and to 23% in 2014. We examine the distributional implications of such increases. The general pattern of results shows that those hardest hit are households in the first income decile, households in rural areas, 6 person households and households containing a single adult with children.
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The role of the value added tax on foodstuffs in the consumer basket

  The role of the value added tax on foodstuffs in the consumer basket

Abstract: When looking for economic policy instruments in the times of economic crisis, even tax instruments are consid- ered, particularly the changes (increases) of the value added tax rates. Most of the EU member states have two VAT rates, while foodstuff s and non-alcoholic beverages are included under a reduced rate. If increasing the reduced VAT rate, the signifi cance of the foodstuff or non-alcoholic beverages in the consumer basket, the regression of the VAT in these com- modities and the signifi cance of the impact on households should be considered. Th is article tries to point out this issue by analyzing the impacts of changes in the VAT rates, or the actual VAT paid by the average households in the Czech Republic in the period from 2005 to 2010.
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INDIAN VALUE ADDED TAX (VAT) SYSTEM: A PROTOTYPE FOR NIGERIA

INDIAN VALUE ADDED TAX (VAT) SYSTEM: A PROTOTYPE FOR NIGERIA

According to Vijay, (2011), founds that the highest tax paid on expenditure was 7% and the lowest was 2% on the 7,110 and 5,021 expenditures respectively and concludes that there was reasonable Value Added Tax (VAT) payment by the sampled income group. Olatunji (2009), founds that government have to put more effort in business enumeration in all the states in order to have a comprehensive database of VAT collection agents, the need for establishment of VAT offices in all local councils and efforts in retrieving proceed of VAT deducted by business should be strived in Nigeria. Jayakumar, (2012), found that VAT is certainly more transparent and accurate system of taxation. The study uses ‘dynamic cluster’, ‘meticulous cluster’ and ‘unambitious cluster’ stages to ascertain VAT implemen- tation in India and its consequences. Result shows that, there is need for VAT transparency in all Indian states and recommends that tax applicability and e-filing will play a major role in VAT system and need for introduction of uniform product classification across India to exhibit implementation with effective return. Komal, (2013), the study found that, VAT implementation is an indispensable phenomenon which it is believed has mutual benefit from both the respondents and gov- ernment officials. It further suggests that the 12.5% and 4% of finished goods and raw material VAT rate shall be adjusted to reduce their margin and consumers shall collect invoice for every purchase for efficient VAT collection and remittance. Onaolapo, Aworemi, and Ajala (2013), found that VAT is beneficial to the economy and recommends that to achieve a greater advantage and effect the VAT bases should be widened in order to reduce/eliminate the issues of tax evasion by informal sector of the economy which almost constitute a higher proportion and even the so-called faithful complying once. Garg, (2014), argued that imple- mentation of Goods and Service Tax (GST
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Impacts of the application of the reverse charge mechanism of the value added tax

Impacts of the application of the reverse charge mechanism of the value added tax

The aim of this paper is, on the basis of the analysis of the reverse charge mechanism in the application of the VAT, to assess the impacts of its application to the provider and to the recipient of the taxable fulfi llments mainly for the construction works. Since January 1, 2012 the reverse charge mechanism has been applied also for construction and assembly works which leads to a signifi cant extension of VAT payers which this provision may aff ect. Reverse charge mechanism is considered to be a specifi c mechanism when applying the value added tax. The liability to declare and pay the output tax is transferred to the recipient of the fulfi llment within the reverse charge mechanism. The aim of the implementation of the reverse charge is especially an eff ort to eliminate situations when the supplier does not pay the VAT on a output from performed taxable fulfi llments, but the customer claims this VAT as a deduction in a full or eventually shortened amount. The paper focused on the impact of application of VAT reverse charge regime to the provider and recipient of taxable supplies of construction works, with regard to the following problems the inclusion of specifi c activities into each product classifi cation codes, determining the recipient of taxable supplies and purpose of the supply, and administrative burden of VAT reverse charge procedure. Eff ects of VAT reverse charge regime on cash fl ows were researched in various types of construction companies. Finally, these eff ects were evaluated with regard to the total collection of VAT and VAT arrears. As results from the development of VAT collection and also from arrears development, the implementation of the reverse charge mechanism is not signifi cantly refl ected on a better collection of the value added tax. Growth of the VAT arrears was in 2011 and 2012 higher than in the previous years. We believe that further signifi cant extension of the range of goods and services, to which is applied the reverse charge mechanism would be very complicated. Tax subjects and also tax administrators would be very burdened if, for example, a third of all transactions would be realized in the reverse charge mechanism and the rest of these would be realized in the standard mechanism. One from the possible solutions would be to apply the reverse charge mechanism to all fulfi llments carried out between tax payers and it would of course mean the fundamental change in the Directive of VAT and the Czech Law on the value added tax. Consequently there should be an extensive change of the accounting so ware, so that application of the reverse charge mechanism as a basic mechanism would be much easier for the tax subjects than nowadays.
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The Distributional Effects of Value Added Tax in Ireland

The Distributional Effects of Value Added Tax in Ireland

Abstract: In this paper we examine the distributional effects of Value Added Tax (VAT) in Ireland. Using the 2004/2005 Household Budget Survey, we assess the amount of VAT that households pay as a proportion of weekly disposable income. We measure VAT payments by equivalised income decile, households of different composition and different household sizes. The current system is highly regressive. With the use of a micro-simulation model we also estimate the impact of changing the VAT rate on certain groups of items and the associated change in revenue. We also consider how the imposition of a flat rate across all goods and services would affect households in different categories. The Irish Government has recently announced that it proposes to increase the standard rate of VAT to 22 per cent in 2013 and to 23 per cent in 2014. We examine the distributional implications of such increases. The general pattern of results shows that those hardest hit are households in the first income decile, households in rural areas, 6 person households and households containing a single adult with children.
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The value added tax : its causes and consequences

The value added tax : its causes and consequences

Fifty years ago the value-added tax (VAT) was rarely heard of outside of France and a few dry specialist texts. Now it raises about 20 percent of the world’s tax revenue, and affects about 4 billion people. Widely adopted in sub-Saharan Africa and elsewhere, it has been the centerpiece of tax reform in many developing countries. By any standards, the rise of the VAT has been the most significant development in tax policy and administration of recent decades. And it is not over yet. Several Caribbean countries are in the process of adopting a VAT, for example, while Libya, Syria and the United Arab Emirates are among those planning introduction in the coming years. All this is widely recognized. Yet the causes and consequences of the rise of the VAT have received virtually no attention, either theoretical or empirical. Essentially nothing is known about the two most basic questions of all: Are there any signs that the VAT has lived up, in practice, to the claims made for it by its advocates (and feared by some of its opponents)? And what exactly is it that has driven its remarkable spread around the world?
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Awareness, knowledge and perception of tax payers towards value added tax (vat) administration in yirgalem town, sidama zone, Snnpr State, Ethiopia

Awareness, knowledge and perception of tax payers towards value added tax (vat) administration in yirgalem town, sidama zone, Snnpr State, Ethiopia

Value Added Tax has also become an indispensable component of tax reform in developing countries. It is the most important tax innovation of the second half of the twentieth century. In line with this perception, an increasing number of developing countries have converted their sales tax to Value Added Tax (VAT). On the basis of findings it may be concluded that most of the tax payers have poor awareness and knowledge about VAT and its different dimensions in Yirgalem Town irrespective of their level of literacy. Although RCA office played crucial role in awareness creation, there is a gap of communication between the clients and RCA officers because the officers believe that the tax payers can get enough information from each other and the medias at large but since the media is not only targeting the study area. No doubt, VAT has its own impact on investment and export according to the study finding. Tax payers do have right perception towards the benefits of VAT. However, majority of the respondents felt that VAT offers many challenges especially increase in operational costs, unnecessary documents maintenance, complicated procedure, etc. Besides, the main areas where there are gaps and problems include registration, record keeping, and issuing VAT receipts.
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IMPACT OF VALUE ADDED TAX ON GDP GROWTH: THE CASE FOR UZBEKISTAN

IMPACT OF VALUE ADDED TAX ON GDP GROWTH: THE CASE FOR UZBEKISTAN

The Value Added Tax (VAT) is considered a specific type of indirect tax, levied in each phase of production and distribution of goods and services. The history of adoption of VAT in Uzbekistan consists about 27 years. In this article, we examine the impact of Value Added Tax on economic growth of Uzbekistan. Following the model used by Gatawa et al (2016) in their investigation of the impact of value added tax and economic growth in Nigeria; this study adopts a modified version of the model. After controlling the lagged effects and possible endogeneity of the variables, the results indicate that positive shocks in VAT collections positively influence the GDP growth. The obtained results are similar to the findings of the previous studies on this issue.
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DETERMINANTS OF VALUE ADDED TAX, INTEREST RATE, INFLATION AND INFLUENCE ON REVENUE GENERATION IN NIGERIA

DETERMINANTS OF VALUE ADDED TAX, INTEREST RATE, INFLATION AND INFLUENCE ON REVENUE GENERATION IN NIGERIA

Premised on the findings of the study, the following conclusions were drawn: if government can maintain a good tax structure in the economy, it has the potential of engendering increase in the revenue generated and as such curb the influence of deficit budgeting and the dependence on external sources of budget financing. Government should provide effective anti-inflationary policy to cushion the inflationary tendencies of value added tax in the country. Government should regulate the rise in the level of interest rate in the country in order not provoke price instability in the country. The Value Added Tax rate of 5% should be increased by 50%, it will double the total revenue contributed to the nation. In order to be more effective in the administration of VAT, all the VAT Agencies should be connected with Information Communication Technology and the Federal Board of Inland Revenue. VAT in Nigeria is positively influence revenue generation.
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Factors Affecting The Compliance Of Value Added Tax In Kiambu County

Factors Affecting The Compliance Of Value Added Tax In Kiambu County

Taxes have existed for a similar length as civilization. The common objectives of any tax system entail raising revenue to fund government operations that assist in the redistribution of both wealth and income and to either encourage or discourage certain activities through the utilization of tax obligations. Although all tax schemes share these purposes, the changes lie with the encumbrance consigned in an individual country to each of these aims. A German businessperson, Wilhelm Von Siemens, is credited with coming up with the idea of a Value-Added Tax (VAT) in the 1920s (Ebrill et al, 2001). A value-added tax (VAT) is a tax on the value that a business firm adds to the things it buys from other firms in producing its own product (Thuronyi, 1996). Indirect taxes such as VAT generate a substantial part of tax revenue in many countries. The VAT was implemented in France in 1954. Its spread has accelerated since, with strong support from the IMF, as it has now been implemented in 156 countries and in these countries, it typically accounts for about one-quarter of all tax revenue (Lejeune, 2011).
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Value Added Tax and Consumer Spending: A Graphical Descriptive Analysis

Value Added Tax and Consumer Spending: A Graphical Descriptive Analysis

With the US considering enacting a VAT style national consumption tax, possibly a multi-stage one, this paper looks at the possible impact on consumer retail spending that such a tax may have. Two countries with similar economies and common law legal structures, namely the United Kingdom (UK) and Canada, will be analyzed. The paper will look at two aspects, the introduction of a Value- Added Tax on consumer spending and the change of rate of the VAT on consumer spending. The study will observe if there is any arbitrage effect of these events. Consumer behavior in the United States will be used as a control variable. The United Kingdom introduced its value added tax in April1973 at the rate of 10% as part of the UK’s entry into the European Economic Community. The VAT superseded the purchase tax, a hidden tax charged at various rates. Over the years the rate of VAT changed a number of times. Between1975 and 1979, there was a “higher rate” on luxury goods. Luxury goods included domestic electrical appliances, radios, TVs and hi-fi equipment, furs and jewellery. Canada introduced its Goods and Services Tax in January 1991 at the rate of 7%. The rate remained stable for about 15 years. When introduced, the GST replaced the Manufacturers' Sales Tax (MST), a hidden tax charged on manufacturers at a 13.5% rate. Like the US, but unlike the UK, Canada has a federal system of government. The provinces (except Alberta) also charge a sales tax in addition to the federal GST (at rates between 7% and 10%). 1 The three territories do not charge their own sales tax.
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VALUE ADDED TAX – FRAUDS AND OTHER PROBLEMATICS WITH THE REIMBURSEMENT SCHEME

VALUE ADDED TAX – FRAUDS AND OTHER PROBLEMATICS WITH THE REIMBURSEMENT SCHEME

Licensed under Creative Common Page 3 wide public. Those most affected are our nation's businesses, especially those that base their activities in exporting. Businesses surveyed are the type that approach the criteria to be included in the value added tax scheme, and they absolutely prove this vacuum that creates this scheme. Every business has respectively refunded amounts by which necessarily affected the liquidity of the firm and other consequences chain. But it must be said that for 2014 were reimbursed by 929.7 mln albanian leke where from 375 businesses, 227 businesses was reimbursed VAT. This comes as a combination of existing funds specifically from law changes. We can admit that the findings of the paper are consistent with the hypothesis raised above.
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Tax expenditures and the efficiency of Croatian value added tax

Tax expenditures and the efficiency of Croatian value added tax

Value added tax in Croatia, along with social security contributions, is the most important tax revenue in the general government budget and covers the largest number of taxpayers. Total revenues from VAT in the analysed period 2002-0 amount on average to 34% of total tax revenue, while the average share of VAT revenue in total general government budget revenue amounts to 30.7%. Since the beginning of VAT application, the taxation system has experienced significant mo- difications primarily related to changes of VAT rates, exemptions, registration threshold, etc. VAT is currently mainly compliant with European guidelines, while some minor harmonisations are expected up to the moment of Croatian accession to the EU, primarily related to abolishment of the zero rate. Since Croatia will be obligated to abolish the currently applied zero rate on some products, this paper estimated the effect of such changes on the Croatian budget. Analysis shows that government revenue will increase by an amount equal to 0.4% of GDP in the case of the application of the lowest prescribed VAT rate of 5% on deliveries that are currently taxed at the zero rate, or analogously 0.8% of GDP in case of application of a VAT rate of 0%. It can be concluded that the share of tax expenditures in GDP in Croatia at the moment of the abolishment of zero rates will also decrease by the same amount, i.e. 0.4 or 0.8 percentage points, depending on the applied reduced rate.
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Another Approach to Evaluating the Productivity of Value Added Tax in Nigeria

Another Approach to Evaluating the Productivity of Value Added Tax in Nigeria

Value Added Tax (VAT) has been attracting so much attention of financial experts, professional tax consultants and those in the academics, to mention a few of the stakeholders. Despite the impressive performance of VAT in virtually all the country where it has been introduced, the revenue generating dynamo has not been maximally tapped. A suspected unusual behaviour of the FIRS operating VAT at sub-optimal level was the overdependence on revenue from crude oil. Emphasis has been on sharing the proceeds from crude oil. We are not tapping the huge resources from other productive sector of the economy. There are still many producers of vatable goods and provider of ratable services that has not being registered talk less of remitting tax. Most professional services providers like accountants, lawyers etc, do not remit VAT. (Audu, 2012).
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Value Added Tax and Inflation: A Graphical and Statistical Analysis

Value Added Tax and Inflation: A Graphical and Statistical Analysis

The United States has debated establishing some kind of consumption tax - a national sales tax or national value added tax (VAT) - for many years, even introducing legislation; for example the Fair Tax Act 2013 (H.R. 25) and National Retail Sales Tax Act of 1997 (H.R.1325). Although these bills have not become law the debate continues. Some states, however, have some modified version of a VAT - Michigan has the ‘single business tax’ and New Hampshire has the ‘business enterprise tax’. The U.S. Treasury has also looked into introducing a VAT type tax to replace the corporate tax (U.S. Treasury, 2007). As a more comprehensive tax reform, Graetz has proposed that most taxpayers would be removed from paying income tax but there would a national VAT instead (Graetz, 2010).
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Aspects of the value added tax within the self assessment system and the extended guarantees for the provision of services in the countries of the European Union

Aspects of the value added tax within the self assessment system and the extended guarantees for the provision of services in the countries of the European Union

harmonization in the field of the value added tax, which shall contribute to the reduction of the barri- ers of free trade and its further development in the European Union market. First, it is necessary to define the problematic points in the various EU countries and the following points on the basis of the general primary debate resulting in the general consensus ap- propriately regulates through the relevant directives. These rules already exist in some form and lead to the implementation of regulations to the national value added tax systems in the EU member states. Series of regulations should be made in the frame of the provision of services. The provision of self- assessed services provided by a person registered for the VAT, especially in the case that the provider from other EU member state has an establishment in the other member state of customer, but it is not involved in the provision of the service is insufficiently treated according to the previous study in the EU countries. Another problematic factor is the provision of the extended guarantee to other EU countries.
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REFORM AND MAXIMIZATION OF TAX REVENUE : THE VALUE ADDED TAX IN REPLACEMENT OF TAX ON REVENUES IN THE DEMOCRATIC REPUBLIC OF THE CONGO

REFORM AND MAXIMIZATION OF TAX REVENUE : THE VALUE ADDED TAX IN REPLACEMENT OF TAX ON REVENUES IN THE DEMOCRATIC REPUBLIC OF THE CONGO

The arrival of the Value Added Tax has allowed the Province of Orientales Tax Department to significantly increase its tax revenues by one hundred and one percent compared to the achievements of the Turnover Tax but with the disorderly VAT credit increase due to three hundred and ninety-nine seventy-three seventy-three in the year 2013 compared to the year 2012 What constitutes a danger for the maximization of revenue from the Value Added Tax during the years to come.

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Modelling Value-Added Tax in the Presence of Multiproduction and Differentiated Exemptions

Modelling Value-Added Tax in the Presence of Multiproduction and Differentiated Exemptions

Since the 1960s, value added tax (VAT) systems have been progressively adopted around the world 1 . The majority of VAT regimes are characterised by a consumption tax base with multiple tax rates, multiple exemptions, and the credit method of tax liability calculation 2 . These VAT characteristics have been incorporated in a number of formal studies on the incidence and economic effects of VAT. However, three important VAT characteristics have yet to be formalised in applied VAT research: multi-production, legislated differences in exemption status, and industry-specific differences in the refundability of VAT paid on inputs to production and investment. The need for careful and detailed treatment of these VAT characteristics is particularly important in disaggregated general equilibrium models. These models are recognised as well suited to analysis of the efficiency effects of tax policies 3 . The modelling of VAT within a general equilibrium framework raises a fourth issue not yet addressed in the VAT modelling literature. Even in highly disaggregated models, commodity and industrial definitions will be, by necessity, aggregates of hundreds or thousands of commodities and industries, each with the possibility of distinct tax rates and exemptions under the relevant nation’s VAT statutes. Previous studies have assumed that a commodity is either exempt or taxed. In this paper we provide a comprehensive method for modelling VAT in a detailed economy-wide setting. Our method addresses the four aforementioned VAT features. We apply our technique to the complex Vietnamese VAT system, and examine the macroeconomic consequences of VAT simplification for this developing economy.
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