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VOL. 11, ISSUE 9 (2025)
A critique to the non-compliance with the provisions of Vat Act in Nigeria
Authors
Dr. YS Uthmana
Abstract
Value Added Tax is one of the key instruments
used by the Nigerian government to generate revenue for public services and
infrastructure. Its operation is governed by the VAT Act. VAT as one of the
most significant non-oil revenue sources is facing widespread non-compliance
These inter alia, include weak compliance among taxpayers, especially in the
informal sector; frequent under-declaration of sales by registered businesses.
This undermines its effectiveness and contribution to fiscal stability. This
paper explores the key statutory instruments governing VAT compliance
highlighting how these laws are intended to regulate registration, filing of
returns, remittance of tax and record keeping by taxable persons. The paper
identifies the nature and extent of non-compliance such as the failure to
register and late or non-filing of returns. It further shows that non-compliance
is more pronounced in sectors such as the informal trade and retail markets,
transportation, hospitality and entertainment, construction and the fast-growing
digital economy. These gaps are traced to factors such as weak institutional
enforcement, corruption, limited taxpayer awareness, economic pressures and
complex administrative procedures. The paper also analyses the legal and
economic implications of non-compliance. It reviews the measures adopted by
government and the Federal Inland Revenue Service such as introduction of
compliance thresholds for small businesses. The study concludes that while
these reforms have improved VAT administration, they remain insufficient in
closing the compliance gap. It recommends inter alia a more robust enforcement
of penalties and simplification of administrative procedures. Only through such
reforms can VAT serve as a reliable tool for fiscal sustainability, economic
development and the promotion of equity in Nigeria’s tax system.
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Pages:48-52
How to cite this article:
Dr. YS Uthmana "A critique to the non-compliance with the provisions of Vat Act in Nigeria". International Journal of Law, Vol 11, Issue 9, 2025, Pages 48-52
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