ASSESSMENT OF E-TAX PAYMENT ON REVENUE GENERATION EFFICIENCY IN NIGERIA Case study of Lagos State Board of Internal Revenue and Nigerian Taxpayers.
TO THE STUDY
Tax is any
form charge levied on a person or an institution by a governing body or its
equivalent such that defaulted payment is punishable by law. The imposition of
taxes and the institution of taxing is as old as civilization itself cutting
across religion, race and continental borders. Prompt tax payment and reduced
tax evasion is always a primary objective of the government in most
civilizations that exist today. The issue of tax evasion has proven to be a
difficult practice to curb even in nations with a proper database of its
citizenry and the current mode of tax payment is redundant and hectic as
ascertained through a survey of our case study. Some of the challenges
governmental bodies have to overcome in order to encourage the prompt payment
of taxes and effectively reduce evasion includes, developing convenient payment
methods and having proper records keeping systems.
essential for sustainable economic development, and tax administration is a
basic function of a successful state. Taxation also helps make a government
accountable to its citizens. When governments spend taxpayers’ money, they are
more accountable to make budget decisions transparent and accessible.
system has received a great attention globally through the development of
information technology, which affects the tax administration system. With the
emergence of information technologies (IT), it is possible for the tax
administrators to improve tax administration system by creating awareness about
their tax structure that most of the taxpayers have limited knowledge about
(Adeyemi, 2013). Electronic revenue collection in developing countries has
gained increasing prominence in the policy debate recently. For instance Nisar
(2013) argued that recent trends in public taxation stress the need of
developing a system of tax assessment and collection that involves internet
services. Several factors explain this, including the potential benefits of
taxation for state building; independence from foreign aid; the fiscal effect
of trade liberalization; the financial and debt crisis in the “West”; and the
acute financial needs of developing countries. Governments in developing
countries face great challenges in collecting tax revenues, which result in a
gap between what they could collect and what they actually collect.
(2014), describes electronic tax system is an online platform whereby the
taxpayer is able to access through internet all the services offered by a
financial authority such as the registration for a personal identification
number, filing of returns and application for compliance certificate,
electronic tax system forms part of the revenue collection reforms by Nigeria
federal Inland Revenue Authority whose main motive is enhancing tax collections
and tax efficiency and thus, tax revenues have been increasing rapidly due to
the country's rapid economic development accelerated by the new systems.
tax filing or e-filing is a process where tax documents or tax returns are
submitted through the internet, usually without the need to submit any paper
return. The e-filing system encompasses the use of internet technology, the
Worldwide Web and Software for a wide range of tax administration and
compliance purposes. Electronic taxation differs among countries hence the name
of the system differs from country to country.
suggested benefit of e-tax filing system have been mentioned in recent times,
among them are that it allows taxpayers to conduct transactions within a few
mouse clicks. This convenience can serve as a key driver of e-filing adoption.
E-filing provides many aspects of ‘convenience’ to taxpayers (that is time to
file, place to conduct the filing, ease-of use, information searching and
online transactions) at a degree that is not available through traditional
channels. E-filing also offers flexibility of time and reduces calculation
error on the tax return form to the
systems in developing economies, like those in more developed ones, face both
new challenges and new possibilities as a result of technological change.
Malaysia’s ongoing reform of its electronic tax ?ling and payment system shows
how and under what conditions technology can bene?t both tax authorities and
taxpayers, though The goal of any tax authority is to establish a system of tax
administration that allows for the collection of required taxes at minimum
cost. A tax authority engages in many activities, such as processing returns
and related information from taxpayers, entering tax return data into a
database, matching returns against ?ling requirements, processing tax payments
and matching them against assessments, and issuing assessments and refunds. One
way to boost a tax authority’s efficiency is by expanding its use of
information and communication technology and through this medium it will
facilitate a broad range of services, including registering taxpayers, ?ling
returns, and processing payments, issuing assessments and checking against
third-party information, an example of this e-tax payment system in Nigeria is
Integrated Tax Administration System (ITAS) introduced in 2013 by the Federal
Inland Revenue Service to improve tax administration in Nigeria and transform
the tax compliance process away from the current manual system which is tedious
As a result
of this, the research study tends to evaluate the effect of E-tax payment
system on revenue generation efficiency in Nigeria.
taxpayers’ resistance, underutilization and reluctance to use electronic filing
system remain a great concern and still plague various tax agencies which are
embracing electronic tax administration systems (EATAAC, 2002). The importance
of understanding and influencing taxpayer’s acceptance of electronic filing
system is critical, given the investment in technology and the potential for
cost saving. Despite the increasing need to increase revenue collection and enforcement
so as to provide public services, developing countries still face the
challenges of low tax compliance and tax administration.
tax system was introduced in 2013 by Federal Inland Revenue Service to increase
financial collection, administration, avail services to the tax payers all the
time from anywhere, reduce costs of compliance and improve tax compliance.
However, tax compliance levels remain low and tax collections are below the
targets set by FIRS .Despite the increasing need to increase revenue collection
and enforcement so as to provide public services, and the introduction of electronic
tax systems in most countries across the global divide, developing countries
like Nigeria, still face the challenges of low tax compliance and tax
offers many benefits to service providers, which are the tax authorities. To
the service provider, e-filing minimizes their workload and operational cost
due to the submission of tax returns in a paperless environment. It also reduces the cost of processing,
storing and handling of tax returns. Despite these benefits associated with
e-filing, tax authorities face some major challenges towards the implementation
of the e-filing system. One such challenge is the public perception of the
e-filing system. After using an
e-service over the Internet, the public may find the e-service system easy and
useful or otherwise. Since the public cannot directly communicate with tax
personnel, see or touch the tax forms as the service is provided online, the
e-filing service system delivered to them may not perform as expected. In
addition, the public may be burdened by the time and effort spent learning the
new system and accommodating any services failure. Although time is a
non-monetary effort and varies among individuals, researchers have recognized
that time is a cost that consumers/users must pay for any use of
major challenge is to ensure that the system runs smoothly and efficiently
during the tax filing period each year. This refers to the technical aspects of
e-filing, i.e. computer and information systems utilized for the efiling system
need to be stable and reliable enough to handle a large amount of information
processing, especially during the peak period of e-filing and particularly as
the deadline approaches. The service provider has to ensure that the e-filing
system can handle the heavy processing of data during the month of tax
submission without any glitches.
critical issue on e-filing is that the tax authorities have to ensure that the
confidentiality and privacy of the information submitted through the Internet
is preserved. If tax authorities are not able to provide an e-filing system
that could overcome these challenges, taxpayers might be reluctant to adopt the
e-filing system. The issues, such as loss of valuable time, information privacy,
glitches on the system’s performance, if not strategically overcome, could be
translated into risks to current and potential adopters of the e-filing system.
1.3. OBJECTIVES OF THE STUDY
objective of this study was to assess the effects of electronic- tax system on
the revenue generation efficiency of FIRS, case of Ikeja Metropolis.
was guided by the following specific objectives;
1. To establish
the effects of electronic tax payment on revenue collection efficiency by tax
2. To establish
the challenges of using electronic- tax system on revenue collection efficiency.
3. Examine the
effect of online tax system on tax compliance among small taxpayers.
4. Examine the
significant relationship between perceived ease of use and online tax system
factors affecting taxpayers’ acceptance of online tax payment system in
possible solutions to the challenges faced in the adoption of E-tax payment
system by taxpayers.
1.4. STATEMENT OF HYPOTHESES
Hypotheses are assumptions
on which a researcher bases his investigation and on the basis of which a
confirmation of the assumed conditions are tested and validated. Based on the
literature, the following hypotheses were developed. The null
H0: There is a direct
negative relationship between online tax system (E-Payment) and efficiency of
revenue generated by Government.
Ho: Perceived ease of use
of e-filing will not have a positive effect on the adoption of e-filing among
taxpayer in Nigeria.
1.5. SIGNIFICANCE OF THE STUDY
State government relies heavily on taxes to fund its infrastructural and
recurrent development expenditure. An increase or decline in tax revenues has a
direct bearing on the economy of Nigeria as a country.
The study is
likely to reveal the strengths or weaknesses associated with implementation of
new technology and its benefits not only to the revenue generated by the
government but also to taxpayers thereby, enriching knowledge to other state
government institutions planning to embark on similar modernization programs.
will also contribute to the existing body of literature knowledge and may form
the basis for further research in the area of E-tax technology and revenue
generation in Nigeria.
shall also seeks to contributes to understanding the effective usage of the online tax system through self-employed taxpayers that leads to
increase in tax compliance and revenue generation in Nigeria.
the recommendations made will be of great help to LSIRS and the small taxpayers
in carrying out a cost-benefit analysis on the use of technology in efficient
tax administration. This may aid in future policy formulation on the same.
Finally, it will also be of use to the student, researchers for further
research study, the existing and prospective taxpayer as well as any interested
party from other field of study who wish to understand the practical aspect of
taxation. It will assist students in their knowledge build-up and appreciation
of the practical E-tax situation of the government.
1.6. SCOPE AND LIMITATION OF THE STUDY
system is referred to as the transmission of tax information directly to the
tax administration using the Internet (Edwards-dowe, we, 2008). The online tax
system makes an effective impact on the economic toward improving the level of
income generation and tax compliance by the taxpayers. This is because of its
convenience, time saving, cost effectiveness from both the tax administrators
and the taxpayers
The scope of
this study is on E-tax payment and revenue generation of government in Nigeria,
with it focus on the Lagos State board of internal Revenue as the case study,
and some few taxpayers in the Lagos Metropolis.
care will be taken to ensure that all tax officials of Tax authority and
various taxpayer at all various level of education are covered in the samples.
As Lagos has become the melting point of Nigeria’s ethnic groups, the
researcher will, among others, sample their opinion on the research topic in
order to get the best possible answers.
research work of this nature difficulties are bound to be encountered. There
was paucity of local literature as the researcher was threading on an area that
has not been over flogged, also the researcher could not generate enough
secondary data because little research has been done earlier in relation to the
research study. Finance constituted another problem limiting the ability of the
researcher to travel more extensively in search of relevant data and opinion.
officials filled the questionnaires in a hurry, because of their busy
schedules, thus affecting the quality of their answers. Time was of the essence
in this research and this also affected the researcher.
1.7. DEFINITION OF TERMS
1. Electronic tax filing or e-filing is a
process where tax documents or tax returns are submitted through the internet,
usually without the need to submit any paper return.
2. Tax compliance is defined as the full payment of all taxes.
3. Tax non-compliance is referred to as any difference between the
actual amount of taxes paid and the amount of taxes due. Tax Service Quality
4. Taxation: is defined as the process or machinery by which
individuals, groups, or communities are made to contribute in some agreed
quantum and method for the purposes of the administration and general
development of the society they belong.
5. Tax service quality (TSQ) can be defined as entire taxpayers'
perceptions or evaluation associated with electronic service connection with
the Internet marketplace
6. Responsiveness is aimed on how fast are the tax
administrators in responding to any inquiries made by the taxpayers.
Responsiveness are referring to the preparedness of self-employed taxpayers to
accomplish a goal in an accurate and timely manner.
7. Reliability is the process by which the system has the ability to assess it
administration function accurately and dependably by evaluating the requisition.
8. Electronic tax system is an online platform whereby the taxpayer
is able to access through internet all the services offered by a financial
authority such as the registration for a personal identification number, filing
of returns and application for compliance certificate.
(Company Income Tax Act) it is a Federal Law operated by the FIRS, which deals with the
taxation of all limited liability companies in Nigeria with the exception of
those engaged in petroleum operations.
10. Persons/tax payers: It includes all taxable persons be it
individual or corporate bodies.
(Federal Board of Inland Revenue Services):
It is an operational arm of Federal Board of Inland Revenue which is
responsible for the Federal Tax Matters.