As per the above mentioned decree a number of services have been declared exempted from value added taxation in Nigeria. These services are all the services that are exported, medical services, plays and performances that are run by educational institutions for educational purposes and services that are provided by community banks, mortgage organizations and people's banks. In Nigeria the companies or business organizations that function on a no profit making basis are required to pay value added taxes.
The Nigerian Federal Government enacted the VAT Amendment Act in 2007. This act empowered the Federal Government to fix the rate of value added taxes to be imposed in Nigeria. The rate was increased to 10%. However, discussions regarding the possibility of a 50% reductions in the rate are on. In Nigeria value added taxes are also imposed on sale of land, as well as check transactions. The number of payments to be made is 12 and the amount of time is 160 hours.
The value added taxes are one of the major sources of financing in a number of economically developing countries across the world. The situation is similar in Nigeria as well. During 1994 the revenues earned from value added taxes in Nigeria exceeded the projections. They contributed 4% of the total revenue raised by the Federal Government in that year. In 1995 the rate of contribution was 5.39%. However, there have been some teething issues as far as value added taxes in Nigeria are concerned.
The members of the organized private sector in Nigeria have been voicing their reservations regarding the value added taxes that are taking a toll on the prices of their products as well as the operational prices of their products. The way the Nigerian Federal Government has looked after issues related to value added taxes in has attracted a certain degree of criticism. Their management of the expenditure of the revenues generated from the value added taxes has faced some flak as well. The fact that no research was conducted into the possible effects of the value added taxes before they were put to work has only compounded the problems. All in all the situation of the value added taxes in Nigeria is far from desirable.