This study investigated effect of value added tax on economic growth of Nigeria using time series data from 1994 to 2012. The study employed ex post facto and extracted variables such as value added tax and real gross domestic product from various Central Bank of Nigeria statistical bulletin.  It used the Engle Granger General Error Correction Model (ECM) technique of data analysis to estimate the relationship of the variables and established that the adjusted R squared 86.7% is the total variation of real gross domestic product attributable to variation in value added tax. The results also established that value added tax has negative but significant relationship with gross domestic product both on short and long run equilibrium conditions. The F-Statistic coefficient of 56.591 which is consistent has probability value of 0.00% and therefore conclude that value added tax has significant effect on real gross domestic product of Nigeria. Consequently, the study recommends that government should embark on providing infrastructures that would yield investment opportunities for the private sector so as to influence economic growth,  increase the value added tax rate for imported goods specifically luxury goods and alcohols and ensure that all accruable revenue from value added tax are remitted as at when due.

KEY WORDS: Value Added Tax, Economic Growth, Error Correction Model and Nigeria.