CHAPTER ONE

      INTRODUCTION

 Taxes in modern economics are the most important source of government revenue. They are compulsory levies that are regularly imposed, and as a rule, not designated for a special purpose they are regarded as a contribution to the general revenue pool from which most government expenditure are financed.

       Taxation occupies a principal position in the Nigerian economy as in other countries. Value – Added –Tax was introduced in Nigeria currently to replace the old sales tax. The old sales tax, has been in operation under the federal government legislated decree No 7 of 1986, but it is operated on the basis of residence

   However, the newly introduced value added tax is operated under the federal government legislated decree No 102 of July 1993. VAT  is a form of indirect tax whose burden is shifted from the manufacturers through the distribution channels to the final consumer who then bears the final burden

    Value added tax came into effect on 1st January 1994 the tax is a tax on consumption. VAT is a multi stage tax which is impose on goods and services as they pass through the various stages in the business chain. From manufacturing, importation through wholesales to relating.  The payment is borne by the final consumer because it is included n the selling price ,it’s administration involves a credit mechanism system whereby a taxable person who is charged tax on the supplies to his entitled to set off that tax against the tax charged by him is supply to other persons , this making him only accountable for the excess of the tax on the supplies from him over the tax on the supplies to him.