Value Added Tax Administration in Nigeria: An Inquiry into Irrecoverable Invoices

Abstract

This paper discusses value added tax (VAT) administration in Nigeria and examines the relationship between irrecoverable invoices and VAT compliance. Twenty small and medium enterprises (SMEs) in the leasing, manufacturing and construction subsectors of the economy were sampled. Data were collected through a survey using questionnaire. Analyses were performed by means of descriptive statistics and Pearson product moment coefficient of correlation with the aid of statistical package for social sciences (SPSS). Findings indicate a statistically significantly moderate negative relationship between irrecoverable invoices and VAT compliance. The tax authority could use the findings to decide on the measures to adopt to achieve efficient VAT administration taking into consideration irrecoverable invoices. This study is of value for better comprehension of VAT administration, particularly by investors entering the Nigerian business environment for the first time. It also highlights irrecoverable invoices factor in enforcing VAT compliance in the context of SMEs.