The impact of value added tax in Nigeria is that of a coin, what I mean by that is that it has two sides, both negative and positive,on the side of government, it has tremendiously increased the revenue earnings as opposed to the normal system before the advent of the (vat), it has reduced the incidence of tax invasion as many people who hitherto used to avoid vat has been paying as it is indirect form of tax system. Many goods that people purchase these days has tax tag sometimes unknowingly by them. VALUE ADDED TAX (VAT): This was introduced by the VAT decree No. 2 of 1993, to replace the old sales tax. It is a consumption tax levied at each stage of the consumption chain, and is borne by the final consumer. It requires a taxable person upon registering with the Federal Board of Inland Revenue to charge and collect VAT at a flat rate of 5% (recently increased to 10%) of all invoiced amounts of taxable goods and services.

VAT paid by a business on purchases is known as input tax, which is recovered from VAT charged on company's sales, known as output tax. If output exceeds input in any particular month the excess is remitted to the Federal Board Of Inland Revenue (FBIR) but where input exceeds output the taxpayer is entitled to a refund of the excess from FBIR though in practice this is not always possible.

A Taxpayer however has the option of recovering excess input from excess output of a subsequent period. It should be stated at this point that recoverable input is limited to VAT on goods imported directly for resale and goods that form the stock-in-trade used for the direct production of any new product on which the output VAT is charged. The other side of the coin is that many people have been complaining of price hike in most goodsd and services provided by government and companies and this is as a result of vat because most services and goods are