Tax shelter any method of reducing taxable income resulting in a reduction of the payments to tax collecting entities, including state and federal governments tax treaty a formal agreement between countries on tax treatment e. National tax policy chartered institute of taxation of nigeria. Challenges and prospects, a case study of lagos state board of internal revenue service, largest undergraduate projects repository, research works and materials. Development of tax law, administration and practice is a joint and several responsibility of the. Effect of tax avoidance and tax evasion in personal income tax. Annual income tax returns by employers and employees closing the compliance gap according to section 41 of pita, all taxable persons are required, without notice or demand, to file a return of their income in the prescribed form and containing specific information in relation to their income and taxes thereon with the tax. The direct tax is a levy on personal, corporate income or property. An overview of national tax policy and administration in nigeria. Jun 14, 2017 value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of commencement of business. According to the presidential committee on national tax policy 2008, the central objective of the nigerian tax. In nigeria, tax administration is confronted with complex and.
Examples are personal income tax, company income tax, petroleum profit tax, and capital gains tax. It explores statutory provisions and administrative challenges that affect the cost layout and. The development of any nation depends on the amount of revenue generated by the government for the provision of infrastructural facilities. In this context, competitiveness is defined as the set of institutions, policies, and. Thus to move forward in the revenue diversification agenda of which tax.
The effect of tax evasion and avoidance on nigerias. Unfortunately, we are far behind on tax law reform in nigeria as the last time any business tax. Nigerian tax rates vary according to the amount of income you earn, and you pay different rates on different portions of your income. O 1department of accountancy, federal polytechnic, ado ekiti, nigeria 2department of business administration and management, federal polytechnic, ado ekiti, nigeria abstract the study investigated the role of tax administration in revenue generation in nigeria between. The purpose is to further enhance the process of tax collection and administration in nigeria. Twenty countries provided responses, with 15 of those. According to azubike 2009 tax is a major source of government revenue all over the world, including nigeria. Nigeria updated october 2017 21 does your legislation provide for specific transfer pricing penalties andor compliance incentives regarding transfer pricing documentation. The real challenges of fighting corruption in nigeria. Taxation and fiscal regulations in nigeria introduction the nigerian tax system has undergone significant changes in recent times. Company tax all companies operating in nigeria outside the oil and gas sector of the economy are. This paper attempts to look at the nigeria tax administration and its capacity to.
The inability of the firm to repay the principal will expose it to the embarrassments resulting from legal actions. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. Impact of tax administration on government revenue in a. Government, tax administrators, practitioners and academics alike. According to the presidential committee on national tax policy 2008, the principal objective of the nigerian tax. Tax revenue generation is faced with a number of challenges. Questionnaire on small and medium enterprises smes chapter one introduction a. Withholding tax is not a separate tax on its own and does not confer an exemption from the filing of annual tax. In 1978, the task force on tax administration under the leadership of alhaji shehu musa formed the federal inland revenue service firs as the operational arm of federal board of inland revenue fbir. The nigeria tax system, like any tax system, is a tripartite structure which comprises of.
Employees simply pay their income tax through the pay as you earn paye system, whereby employers deduct the due tax at source from the salaries and transfer it directly to the firs on a monthly basis, while independent workers and beneficiaries of additional income are required to file their own tax. Content analysis of published works, policy documents, and archival materials on the subject. Information and translations of tax administration in the most comprehensive dictionary definitions resource on the web. O university of nigeria, nsukka ou innovation centre agboeze irene e. Impact of information technology on tax administration in southwest, nigeria. Tax reform and administration in nigeria chapter one introduction background to the study the recent global crisis in the world has brought to the fore the need to note. One of the significa nt records by which development and growth can be measured in any general. By taiwo oyedele nigerias ranking has declined 3 places from 124 to 127 out of 8 countries in the latest global competitiveness index by the world economic forum. This study a nalyses the impact of non oil tax revenue on economic growth from 1993 to 2012 in nigeria. The government is also seeking for a way to incur minimal cost in the process of enforcing tax on nigerias. Different types, forms and classes of taxes exist anyaduba, 2004 but the commonest classification in nigeria is that according to the tax payer categorised as direct or indirect. On a related note, the lagos state government has setup a rapid tax prosecution unit to prosecute tax.
Easily file federal inland revenue service firs and state inland revenue service i. The tax is normally to be deducted at source when a payment is to be made to the beneficiary. Administration of current taxes in nigeria vanguard news. Business or trade only partially carried on or deemed to be carried on in nigeria. Thus to move forward in the revenue diversification agenda of which tax is a critical pressure point, there is an.
This administration is committed to diversifying the sources of government revenues by significantly increasing tax to gross domestic product. The nigerian tax system has undergone several reforms geared at enhancing tax collection and administration with minimal enforcement cost. The role of taxation in promoting economic growth in nigeria is not fully felt, and optimal tax is not been realized that can engine economic growth primarily because of its poor administration. A suggested framework article pdf available in mediterranean journal of social sciences.
One major source of generating this revenue is taxation. The tax revenue collection in nigeria faces some formidable problems which includes the high tax rates and complex filing procedures, multiple taxation and lack of proper enlightenment, lack of statistical data, poor tax administration, and inability to prioritize tax effort, multiplicity of taxes and increase in underground economy. Furthermore, staff productivity may have changed, possibly due to. This government effort, notwithstanding, the problem of tax. Not all nairas earned are equal as far as the taxman is concerned.
Definition of tax administration in the dictionary. Impact of information technology on tax administration in. Nigerias firs provides updates on tax administration in. All of these are expected to work together in order to achieve the economic goal of the nation. The national tax policy seeks to provide a set of guidelines, rules and modus operandi that would regulate nigerias tax system and provide a basis for tax legislation and tax administration in nigeria. Short term debt ratio constitutes mostly entire amount of the firms total debt ratio with the mean of 0. Firs and billed to have been launched at pilot offices, this. Statement of general problem small and medium enterprises smes in nigeria have not performed creditably well and hence have not played the expected vital and vibrant role in the economic growth and development of nigeria. One of the significant records by which development and growth can be measured in any general. The tax structure of any economy tends to vary substantially according to the level of development reflecting the availability of tax bases and.
Global tax alert nigeria s firs provides updates on tax administration in nigeria new. Under current nigerian law, taxation is enforced by the. The tax system in nigeria is made up of tax policy and tax laws, stratified into tax assessment, tax collection and tax administration. The federal executive council fec is the highest federal level decision making body in nigeria and is responsible for decisions, which impact all levels of government in nigeria. O 1department of accountancy, federal polytechnic, ado ekiti, nigeria 2department of business administration and management, federal polytechnic, ado ekiti, nigeria abstract the study investigated the role of tax administration in revenue generation in nigeria. Revenue generation and tax administration in nigeria 1domma, sunday o. Companies are required to register for tax and file their audited accounts and tax computations with the firs within six months of their financial yearend on a selfassessment basis or 18 months after incorporation whichever comes first. Nigerias federal inland revenue service, 2004 2009 synopsis in 2004 ifueko omoigui okauru, a management consultant with no previous government experience, took on the challenge of fixing nigeria s corrupt and dysfunctional tax. Aug 09, 2016 taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government.
In the light of this reality and the general realisation that it would be foolhardy if nigeria continues to solely depend on oil revenues whilst neglecting other nonoil sources, adapting the tax administrative. Department of accountancy university of nigeria nsukka to. Understanding withholding tax wht in nigeria completefmc. With the electronic tax filing system, every individual and company can file. Tax refunds are money given back at the end of the financial year. Norad corruption hunters network 2018 presentation by prof. The prime aim of tax administration in most nations of the world is essentially to generate revenue for government expenditure on social welfare such as d. The national tax policy is an initiative of the federal government of nigeria which is being. The taxation of foreign aid overseas development institute. Theoretical and empirical body of knowledge emanating from mm theorems have considered a variant of wealth effects linked to leverage including bankruptcy and agency effects. Bolaji owasanoye oslo norway, 2526, june 2018 introduction it is not disputable that corruption holds the ace for nigerias sorry state of underdevelopment. Having firmly and solemnly resolve, to live in unity and harmony as one indivisible and. Generally, tax is assessed in accordance with some reasonable rules of.
The recent reforms include the introduction of tin. The taxable period is the fiscal year, which runs from 1 january to 31 december. Taxation patterns throughout history are largely explained by administrative consideration. Understanding withholding tax wht in nigeria therefore, you must know about. Withholding tax is not a separate tax on its own and does not confer an exemption from the filing of annual tax returns by the company which had suffered wht. The tax system in nigeria is made up of the tax policy, the tax laws and the tax administration. According to the presidential committee on national tax policy 2008, the central objective of the nigerian tax system is to contribute to the. Tax and taxation in nigeria europeanamerican journals. Tax system in nigeria has undergone various policy changes geared at a more effective and efficient way of tax collection and administration. Lirs lagos state inland revenue service tax returns online with 100% accuracy. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are.
Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. Everything you need to know about small business tax in nigeria. Capital gains tax administration in nigeria tarababir. Tax policy, tax legislation and tax administration. Taxation in nigeria plus history of taxation in nigeria. Nigerias federal inland revenue service, 2004 2009 synopsis in 2004 ifueko omoigui okauru, a management consultant with no previous government experience, took on the challenge of fixing nigerias corrupt and dysfunctional tax system. This paper examines the factors that affect tax administration in nigeria. Nigeria and the consequent integration of more tax payers in the financial system, there is palpable opportunity for tax authorities to track unidentified income through integrating their systems with financial institutions. Petroleum companies are required to file their returns of estimated tax. Relevant tax authority may assess and charge tax on the turnover of a business, etc. Theory and practice page 7 public administration is the machinery used by the service state to place itself in a position to make plans and programmes that can carried out, and to carry out the plans and programmes it has made. Impact of tax administration on government revenue. Section 4 examines the effects of fiscal measures on the economy in the country.
Capital gains tax administration in nigeria is regulated by the capital gains tax act cap c. Oct 03, 2014 impact of ict on tax administration in nigeria 1. Withholding tax is an advance payment of income tax. Tax, simply is a charge imposed by governmental authority upon property, individual, or transaction, to raise money for public. Global edition is a free, personalized email subscription service that allows you to receive ey global tax alerts, newsletters, events, and thought leadership published across all areas of tax. Tax credit allowable against tax payable on income derived from outside nigeria. Tax administration and revenue generation of lagos state. In principle, wht is a payment on account of the ultimate income tax liability of the taxpayer or company. The study examines the administration of companies income tax in nigeria. Tax evasion and tax avoidance had a very serious effect on the national income since the tax revenue.
According to the presidential committee on national tax policy 2008, the principal objective of the nigerian tax system is to contribute directly to public finance. It is a clear statement on the principles governing tax administration and revenue collection. Some state governments in an effort towards solving this problem had even gone to the extent of engaging the services of tax consultants. The ntp is a deliberate effort towards entrenching a robust and efficient tax system. Such authorities are the joint tax board, which is the apex unifying body for all tax authorities in nigeria. What you need to be aware of by taiwo oyedele on december 12, 2011 the management board of the federal inland revenue service. An examination of the laws on tax reliefs and exemption in. Income tax noncompliance in nigeria and the moderating effect of public governance quality. The ntp is a deliberate effort towards entrenching a robust and efficient tax. Speaking notes on the real challenges of fighting corruption.
The nigerian tax system has been taken through several reforms and modifications. An overview of national tax policy and administration in. Even after some tax policies the tax authority has put in place over the few years such as the e payment scheme, tax identification number. No penalties are imposed based on the respective tax. Detailed description of corporate tax administration in nigeria. National tax policy for nigeria final draft submitted to the federal executive council.
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