For example, nigeria have found ways to enhance the proper administration for collection of revenue in nigeria. The rates of withholding tax in nigeria varies among individuals, companies and corporate bodies. Withholding tax is a tax leveled on income earners but made payable by the payer of the income rather than the recipient of the income. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. Key words taxation, revenue generation, small and medium enterprises, tax monitoring, tax data base, tax. Tax policy, tax legislation and tax administration. Challenges and prospects, a case study of lagos state board of internal revenue service, largest undergraduate projects repository, research works and materials. Tax to gdp ratio will continue to be low and likely to be lower than 2018 the factors that impacted on tax collection in 2018 remain relevant in 2019. In view of the above, the administration of his excellency, the governor of kano state, dr. Burning issues in the nigeria tax system and tax reforms on. What are the problems associated with tax administration in nigeria.
Understanding withholding tax wht in nigeria therefore, you must know about. Impact of tax administration on government revenue in a. Tax reform and administration in nigeria pdf download. The administration of tax is very important to any government as it is the body responsible for implementing and governing the tax laws and other tax related to assessment, collection and remittance of tax. 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. Feb 09, 2017 understanding withholding tax wht in nigeria therefore, you must know about. 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. Impact of etaxation on nigerias revenue and economic growth. Government, tax administrators, practitioners and academics alike.
Like all other indirect taxes, it is a tax that targets the final consumer of goods and services. In this context, competitiveness is defined as the set of institutions, policies, and. Sometimes the purchaser ends up deducting withholding tax from payment invoice of multiple suppliers but fail to remit it to the relevant tax authority. The objective of this study is to critically analyse tax administration in nigeria. Doc an assessment of tax administration in nigeria. The rate of tax payable is not a fixed sum, depending on the gross income of the taxable employee, and the tax relief granted to him under personal income tax act pita. Therefore, the main objective of this study is to critically analyze tax administration in nigeria. In other words, it is a contravention of tax laws whereby a taxable person.
Explanatory notes on withholding tax administration in nigeria. The need for the appraisal of tax administration has been over due. 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. One of the most often overlooked is making tax administration more effective. The problem of withholding tax in nigeria is the poor administration that leaves a loop hole in the system.
The nigeria tax system the fiscal operation of nigeria is arranged in such a way that it adheres to the tenets of a federal system of government practiced in the country. But where a person provides services to another for e. Value added tax tax is a consumption tax chargeable on the value added to a product in the process of production. The study conclusion avail for longrun taxation behaviour. Pdf the article is about problems and opportunities of tax administration in gombe state, nigeria find, read and cite all the research you. What are the implications of income tax administration for the nigerian economy. The purpose of vat in nigeria is to increase governments federal, state and local revenue from. 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. This edition of the nigerian tax journal summarizes the decided tax cases and administrative pronouncements by rtas and tax administrators in 2018. A withholding tax is the tax required by law to be withheld by a party from each payment made to another contracting party from the income or services rendered. Tax administration and revenue generation of lagos state. It was collected by the local chiefs for the purpose of administration and defence. National tax policy chartered institute of taxation of nigeria. It is rapidly replacing paperbased tax reporting systems.
Electronic tax system was introduced by nigeria tax authority to increase financial collection, administration, render services to the tax payers all the time from anywhere, reduce costs of compliance and improve tax compliance. 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. The act administered by both federal inland revenue service and the states internal revenue service. The tax system in nigeria is made up of tax policy and tax laws, stratified into tax assessment, tax collection and tax administration. It also determined the impact of evasion and tax avoidance on the revenue generation in ogun state. Tax and taxation in nigeria europeanamerican journals. This paper examines and analyses compliance and enforcement issues in tax administration in nigeria. The tax system in nigeria is made up of the tax policy, the tax laws and the tax administration. Nigerian tax system and administration semantic scholar. The administration of tax is vested in various tax authorities depending on the type of tax under consideration.
Capital gains tax administration in nigeria tarababir. This is to meet the standard of ensuring that economic realities are met. 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. Firs and billed to have been launched at pilot offices, this. Taxation in nigeria plus history of taxation in nigeria. Every person was expected to give part of his or her proceeds from cultivation of. Key words taxation, revenue generation, small and medium enterprises, tax monitoring, tax data base, tax education, internally generated revenue igr. What is the problem associated with the tax laws and what are the likely amendments for same. 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 administration of tax in nigeria is vested in the various tax authorities depending on the type of tax under consideration. Activities of nonnigerian companies, which would attract tax in nigeria and other. Reports have shown that despite the numerous efforts of government and its relevant agencies in the administration of tax in nigeria, there are still problems in the system such as under assessment of tax payers, tax evasion corruption among tax officials etc. This dearth of economic literature on comprehensive analysis of tax administration, policies and law in our economy apparently leaves a gap between what the people perceive to be reliable tax revenue administration and what it is in reality. Yet, tax administration was found to have no insignificant effect on tax payment in.
By shamsudeen ladan shagari thesis submitted to othman yeop abdullah graduate school of business, universiti utara malaysia, in partial fulfillment of the requirement for the master of sciences international accounting. This form of tax is reported to be one of the most stable sources of revenue to governments however. According to azubike 2009 tax is a major source of government revenue all over the world, including nigeria. The nigeria tax system, like any tax system, is a tripartite structure which comprises of. Unfortunately, we are far behind on tax law reform in nigeria as the last time any business tax legislation was enacted. Nigeria is governed by a federal system, hence its fiscal operations also adhere to the same principle, a fact which has serious implications on how the tax system is managed. Article pdf available november 2018 with 7,051 reads. Each state has its state internal revenue service that handles tax administration, while federal inland revenue service administers pita in the federal capital territory. Ten quick steps to unlocking taxrevenue collection in.
Where a person rents or hires propertyservices from another, withholding tax at the rate of 10% will apply. Successful reform can enable a country to tackle the challenges of rapid growth and ensure that the flow of revenue is stable and longer lasting. Tax administration jamaica taj wishes to advise employers that an enhanced form p45 has been designed for them to electronically provide information on the particulars of employees laid off from their employment, via the taj website at. Such authorities are the joint tax board, which is the apex unifying body for all tax authorities in nigeria. According to soyode and kajola 2006, the problems of tax administration in nigeria are as follows. The study examines the effect of tax avoidance and tax evasion on personal income tax administration in nigeria. Development of tax law, administration and practice is a joint and several responsibility of the. What factors affect the implimentation of tax statutes in nigeria. One major source of generating this revenue is taxation.
Tax credit allowable against tax payable on income derived from outside nigeria. Guidelines on administration of withholding tax in nigeria. The national tax policy is an initiative of the federal government of nigeria which is being. Administration of taxes the administration of tax is vested in various tax authorities depending on the type of tax under consideration. The development of any nation depends on the amount of revenue generated by the government for the provision of infrastructural facilities.
Business or trade only partially carried on or deemed to be carried on in nigeria. The nigerian tax system has undergone several reforms geared at enhancing tax collection and administration with minimal enforcement cost. Pdf the impact of tax administration on revenue generation in. Tax evasion is a deliberate and willful practice of not disclosing full taxable income so as to pay less tax. The impact of tax revenue on nigerian economy case of federal board of inland revenue matthew a. Abdullahi umar ganduje ofr, is set to convert the kano state economy from crude oilbased to productivitybased using tax and non tax revenues sources so as to ensure faster and sustainable development of the state. The impact of tax administration on revenue generation in gombe state, nigeria. An assessment of the prospects of property tax administration. These include the grant of tax incentives, weak revenue administration capacity to deal with evasion and lack of data especially around the informal sector. The value added tax vat administration in nigeria and the. The thrust of this study is to examine the effect of tax administration on revenue generation in nigeria. The difficulties and prospects of tax administration in nigeria a case study of the abia state board of internal revenue with abstract, chapter 15, references and questionnaire. The chartered institute of taxation of nigeria is the professional certified tax administrators in nigeria. In nigeria, tax administration has been encumbered by several factors ranging from inadequate and unreliable data, paucity of administrative capacity, shortage of skilled manpower, corrupt tax officials, high incidence of tax avoidance and evasion.
Pdf an assessment of the prospects of property tax. The executive chairman of nigeria s federal inland revenue service firs, mr. We have also published, for the first time, an article by an academic. What are the prospects of tax administration in nigeria. Revenue generation and tax administration in nigeria 1domma, sunday o. National tax policy chartered institute of taxation of. Challenges and prospects a case study of lagos state board of internal revenue service chapter one introduction 1. Withholding tax in nigeria administration and rates.
This study is aimed at ascertaining the effect of tax administration on revenue generation in gombe state. Tax is a compulsory levy imposed by the government of a country on individuals and corporate entities in respective of return of service expected from that government. Fiscal federalism visavis tax administration in nigeria is characterized by series of problems. Administration of current taxes in nigeria vanguard news. Nigeria s is a tax system that is lopsided and have the dominance of oil revenue. The national tax policy seeks to provide a set of guidelines, rules and modus operandi that would regulate nigeria s tax system and provide a basis for tax legislation and tax administration in nigeria. Issues and challenges inherent in the nigerian tax system. The recent global crisis in the world has brought to the fore the need to note that this overdependence on oil creates unnecessary shocks and thus, the need for diversification of the nations resource base and long term growth path. Nigerias firs provides updates on tax administration in. 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. Article pdf 89kb numerous challenges can undo the benefits of rapid growth in emerging economies.
Pdf the impact of tax administration on revenue generation. Impact of etaxation on nigerias revenue and economic. 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. The difficulties and prospects of tax administration in nigeria a case study of the abia state board of internal revenue abstract. Tax evasion and tax avoidance, a problem which seems to have defied solution, had. Citn was formed by the government for the purpose of training and educated professionals. According to the presidential committee on national tax policy 2008, the central objective of the nigerian tax system is to contribute to the. It was observed that tax constitute a major source of revenue to nigeria. Property tax is generally a tax imposed by municipalities upon owners of real property within their jurisdiction based on the value of such property. Doc an assessment of tax administration in nigeria abubakar. To kiabel 2011 and soyode and kajola 2006, tax administration is the process of assessing and collecting taxes from individuals and companies by the. Tax compliance barriers and internally generated revenue in. Understanding withholding tax wht in nigeria completefmc. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are.
The components of the tripartite structure of a tax system will now be mentioned in relationship with the nigerian tax system. As a general rule, income on a property rent, hire or lease payments or rights royalties situated in nigeria is liable to tax in nigeria, the place of payment not withstanding. Tax compliance barriers and internally generated revenue. Everything you need to know about small business tax in nigeria. All of these are expected to work together in order to achieve the economic goal of the nation. Capital gains tax administration in nigeria is regulated by the capital gains tax act cap c. But despite the dominance of petroleum, taxation still remains an indispensable source of revenue.
Nigeria is liable to tax in nigeria, the place of payment not withstanding. By taiwo oyedele nigeria s ranking has declined 3 places from 124 to 127 out of 8 countries in the latest global competitiveness index by the world economic forum. Difficulties and prospects of tax administration in nigeria. According to the presidential committee on national tax policy 2008, the principal objective of the nigerian tax system is to contribute directly to. Burning issues in the nigeria tax system and tax reforms. Where a person rents or hires propertyservices from another, wht at the rate of 10% will apply. The reforms brought about by the benue state tax administration from 2015 to 2018. Babatunde fowler delivered, on 6 september 2018, a keynote address at a stakeholders meeting on tax administration and national revenue. Relevant tax authority may assess and charge tax on the turnover of a business, etc. Good tax administration requires strong technical capacity by the administrative agency but also a welldesigned tax. Concept and nature of taxation anyanwu 1997 defined taxation as the compulsory transfer or payment or occasionally of goods and services from private individuals.
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