Value Added Tax on Imported Services in Nigeria: Understanding the Law and Easing Conflicts

Abstract

This paper seeks to create an insight into the intendments of the Nigerian Value Added Tax Act on taxation of supplies by non-residents to Nigerian residents, and the ideal approaches for amelioration of the controversies. Analyses of laws and judicial decisions in the paper find that the Destination Principle and the Reverse Charge Mechanism endorsed by Nigerian courts which have been severely criticized in legal opinion circles as alien to Nigerian law are actually contained in the law, albeit impliedly. Thus the problem of Value Added Tax on imported services in Nigeria seems to be more of poor appreciation of the law, than of the contents of the law. Hence, awareness creation on the law, revival of the criminal provisions, executive measures, and contractual innovations are the main recommendations to ameliorate the controversies.

Keywords: Value Added Tax, Supplies, Non-residents, Destination Principle, Reverse Charge Mechanism