Digitalization of VAT and Tax Evasion Control in Nigeria

An Empirical Analysis

Abstract

This study examines the impact of digitalisation on the administration of Value Added Tax (VAT) and its effect on controlling tax evasion in Nigeria. Utilising an ex-post facto research design, the study analysed secondary data obtained from the Federal Inland Revenue Service (FIRS) now known as Nigeria Revenue Service (NRS), and the Central Bank of Nigeria (CBN) Statistical Bulletin from 2000 to 2023. By comparing the pre-digitalisation and post-digitalisation periods, a paired t-test was conducted to determine whether a statistically significant difference existed in VAT revenue. The results revealed a notable increase in VAT revenue following digitalisation, suggesting that digital tools enhance transparency, reduce opportunities for tax evasion, and promote revenue generation. The findings highlight the importance of embracing digital innovations in tax administration to improve compliance and efficiency within the Nigerian tax system. The study recommends increased investment in VAT-specific digital tools and taxpayer education to further consolidate these gains.