AN OVERVIEW OF THE ADMINISTRATION OF VALUE ADDED TAX UNDER THE NIGERIAN TAX LAW

The government employs Value Added Tax as a primary mechanism for generating revenue to fund public services and develop infrastructure. Governed by the VAT Act, the administration of this tax is consequently crucial for the nation's economic development. The Federal Inland Revenue Service (FIRS) is designated as the primary body responsible for managing VAT, a role that encompasses the registration of taxable entities, as well as assessment, collection, auditing, enforcement, and taxpayer education. Despite the critical importance of VAT management, the legal framework in Nigeria has been beset by numerous problems and challenges. Among these issues are weak taxpayer compliance, particularly within the informal sector, and the common practice of under-declaring sales by registered businesses. Furthermore, constitutional disputes have arisen between federal and state governments regarding taxing authority, compounded by institutional inefficiencies that undermine both enforcement and revenue collection efforts. This paper presents a detailed analysis of Value Added Tax (VAT) administration under Nigerian tax law, concentrating on its legal structure, the institutional duties of revenue authorities, and the challenges that have influenced its implementation. Employing a doctrinal research methodology, this study determines that while VAT has been instrumental in diversifying Nigeria’s revenue base away from its heavy reliance on oil, its administration has not yet achieved its maximum potential. Although recent digital reforms have enhanced efficiency, significant deficiencies persist in the areas of enforcement, taxpayer education, and inter-agency coordination. Consequently, this paper recommends that the government bolster the administrative capacity of the FIRS, resolve constitutional ambiguities surrounding taxing powers through judicial interpretation or legislative amendment, and broaden the integration of digital technologies to minimize revenue leakages.