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Many countries of the world today have been striving very hard to achieve rapid overall development through the optimum assessment and tax administration in Nigeria to ensure collection and expanded revenue base. New forms of taxes are selectively being introduced in this era particularly by the underdeveloped nations to boast their revenue and incapacity with the aim of improving the socio-economic development of their countries. One of such modern forms of taxation is the VAT introduced on 1993 into the Nigerian tax system as a replacement of sale tax. The purpose of this research is therefore hinged on the Effects and the Administration of Value Added tax in the Nigeria Economy by the Federal Board of Inland revenue. The research started with an outline of the research objective, the review of related literature of the study and hypothesis are formulated with the aim of finding solutions to the research problems identified. The data for the research was obtained largely from primary and secondary sources. The research revealed through the hypothesis tested, that VAT is a significant sources of revenue to the government and that it contributes to the development of the country. Consequently, some problems standing in the way of VAT are highlighted, but with an assertion that the future for VAT is after all bright. The research draws a conclusion and advances to recommendations for improving the optimal machinery of VAT to ensure its sustained contribution to the Nigeria economy.