THE CONTRIBUTION OF VALUE ADDED TAX ON REVENUE GENERATION IN NIGERIA
Abstract
ABSTRACT
This study investigates the contribution of Value Added Tax (VAT) to revenue generation in Nigeria between 2010 and 2024, using data from the Federal Inland Revenue Service (FIRS), the Central Bank of Nigeria (CBN), and the National Bureau of Statistics (NBS). Employing descriptive statistics, correlation analysis, and an Ordinary Least Squares (OLS) regression model, the research examined the relationship between VAT revenue and total federally collected revenue. Findings reveal that VAT revenue grew from ₦562 billion in 2010 to an estimated ₦3.45 trillion in 2024, while its share of total government revenue increased from 7.7% to over 20%. The OLS results show a strong positive and statistically significant impact of VAT on total government revenue (R² ≈ 0.95). The study concludes that VAT is a reliable, non-oil source of fiscal revenue and recommends strengthening tax administration, broadening the VAT base, and enhancing taxpayer education to further improve Nigeria’s fiscal sustainability.
Keywords: Value Added Tax, Revenue Generation, Fiscal Policy, Nigeria, Regression Analysis
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