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ICAN ATS 3 TAXATION

WEEK 7 QUESTIONS
TOPIC: VALUE ADDED TAX
REVIEW QUESTIONS

MULTIPLE CHOICE QUESTIONS:


1. Which of the following levies and taxes is NOT collectible by a Local
Government?
A. Market Permit
B. Liquor License fee
C. Tenement rates
D. Cattle tax
E. Value Added Tax

2. Which of the following is NOT exempted from Value Added Tax?


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A. Basic food items
B. Medical products
C. Luxury cars
D. Baby products
E. Books and educational materials
3. Which of the following is NOT a duty of the Value Added Tax Technical
Committee?
A. Settle disputes among states

B. Consider all the tax matters that require technical expertise and make
recommendations to the Board

C. Advise the Board on the duties on management and administration of


VAT

D. Attend to such other matters as the Board may from time to time refer
to it
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E. Organize meetings of technical importance on VAT matters with the
Board
4. Which of the following is NOT a record to be maintained by registered
persons for the purpose of accounting for Value Added Tax?
A. Tax invoices received
B. Copies of all tax invoices issued
C. Documentation relating to the importation and exportation of goods
and services
D. Balance Sheet for the business at year-end
E. A VAT account to show total output tax, total input tax and the amount
due or refundable for each month

5. Value Added Tax Technical Committee shall include all these members
EXCEPT
A. Chairman of FIRS/ Revenue Agency Governing Board
B. Representative of State Government
C. Director of FIRS
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D. Accountant-General of the Federation
E. Director of Nigeria Customs Service

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7. The value of imported goods is deemed to include the following EXCEPT
A. Import duties levied on the goods
B. The imported price of the goods
C. VAT paid on the goods by reason of importation
D. Insurance premium incurred after the goods had been cleared
from the port
E. The clearing Agent fees included in the bill

8. Which of the following information will NOT feature in a tax invoice?


A. Rate of VAT
B. Biodata of tax payer
C. Customer’s name and address
D. Tax payer’s identification number
E. Type of goods
9. Which of the following is no longer exempted from Value Added Tax?
A. Export Services
B. Baby products

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C. Newspapers and magazines
D. Basic food Items
E. Books and Educational materials
10. Payment of Value Added Tax (VAT)/Goods and Services Tax (GST) should be
effected not later than………………following the month of transaction.
A. 30 days
B. 5 days
C. 20 days
D. 21 days
E. 10 days

SHORT ANSWER QUESTION:


1. Value Added Tax is paid by ...............................

2. State TWO examples of Consumption Tax?

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3. List TWO items contained in Value Added Tax Invoice.
4. Value Added Tax is charged at.............................
5. Which relevant Tax Authority administers Value Added Tax?
6. What form is used to file the monthly Value Added Tax returns?
7. In respect of VAT, an appeal from the Tax Appeal Tribunal shall be made to
the ……………………

8. Credit method and…………………..are two methods of claiming VAT refund.

9. Under the Value Added Tax Act, the document that must be issued for all
supplies is called ………..………
10. VAT returns must be rendered on/before ………………. day of the month
following that in which the purchase or supply of …….…………… goods or services
were made.

THEORY
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Question1:
The Value Added Tax Act states the offences that may be committed and
the attendant penalties.
You are required to state five offences and their penalties.

Question2:
List any FIVE problems associated with administration and management of
Value Added Tax in your country.

Question3:

Jolayemi Company Limited engages in catering and hotel services. The


company prepares
accounts up to 31 December every year and it is a registered Value Added Tax
(VAT) agent of
Federal Inland Revenue Service.
The VAT accounts for the year 2011 show the following:
VAT ACCOUNT
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N’000 N’000
VAT paid on food materials 4,400 VAT charged on foods and drinks7, 700
VAT paid on drinks for sale 500 VAT charged on accommodation 12,550
VAT paid on furniture 625 VAT charged on services 4,550
Amount remitted to FIRS 10,000
Balance c/d at 30/12 9,275
24,800 24,800

You are required to:


a. Compute the total amount of VAT due for 2011 tax year.
b. Ascertain the balance of VAT not yet remitted as at 31 December 2011.

Question4:
Oriyomi Nigeria Limited is a registered VAT agent with the Federal Inland
Revenue Service (FIRS). The company prepared the following accounts in
relation to its VAT transactions for the year ended 31 December 2011.
VALUE ADDED TAX ACCOUNT
N N
Vat charged on services 986,666
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Vat charged on purchased items for resale 2,773,334
Vat charged on manufactured goods 2,524,444
6,284,444
VAT PAID
On raw materials 754,844
On merchandise items 2,148,444
On Fixed Assets purchased 343,110
On legal and other services 48,000 3,294,398)
2,990,046
Remittance to FIRS (2,618,666)
Balance at 31 December 2011 371,380
Required:
a. Compute the total amount of VAT due to FIRS.
b. Ascertain the balance of VAT to be remitted at the end of the year.

Question5:
Benjis International Limited is a manufacturer of hospital equipment that
registered for VAT purposes. During the year 2011, the company expended
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$1,920,000 on the materials in the process of converting same into finished
products for resale, while it bought its major inputs for $12million. At the end
of the year, only 55% of the total costs of finished products were sold at
$18,240,000. The suppliers of major input materials are registered companies
for VAT purposes.

You are required to:


a. Compute total VAT payable for the year ended 31December 2011.

b. Explain briefly FIVE merits of the Value Added Tax (VAT) system

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