ABSTRACT
This research work is titled “Problems and prospects of in
of income tax Administration in Nigeria” the aim of this work is summarization
as determining the proportion of taxation adults who pay tax, the root cause of
non payment of tax, rate of tax compliance of self employed persons, taxes
collected whether they are correctly remitted to the government. In the light
of these the research problem is to identify the hoop holes in the
administrative machinery of income tax in Nigeria. In the course of this work,
the methodology context will be explored in the note of data collection and
analysis. The data are well collected from both primary and secondary sources
which include questionnaire, discussions with officials of the board, tax
journal and website of the board. In this research work, the researcher
identified his findings to improving income tax administration in Nigeria lead
to better prospect. The researcher, for the course of this study recommended
the following, that the tax should be regularly reviewed, that there should be
a tremendous monitoring of the various tax officials and that
the federal in and Revenue service (FIRS) should be equipped with modern
facilities as all this help to foster a better tax system in Nigeria.
TABLE OF CONTENT
Title Page
i
Approval Page
ii
Dedication
iii
Acknowledgement
iv
Abstract
vi
Table of Content vi
CHAPTERS
Chapter 1: Introduction
Chapter 2: Literature Review
Chapter 3: Research Design and Methodology
Chapter 4: Presentation and Analysis of Data
Chapter 5: Summary, Conclusion and Recommendation.
CHAPTER ONE
1.0 Introduction
1
1.1 Background of the study 1
1.2 Statement of the problem 2
1.3 Objectives of the study
3
1.4 Research Question
4
1.5 Significance of the study
5
1.6 Scope of the study
6
1.7 Limitation of the study 6
1.8 Definition of terms
7
CHAPTER TWO
2.0 Literature review
10
2.1Introduction
10
2.2 Nature of taxation
16
2.3 Structure and Administration of Nigeria Tax System 18
2.4 The State Board of Internal Revenue 19
2.5 Process of Tax Administration in Nigeria 22
2.6 Looking at some tax Legislature in Nigeria 29
2.7 Problems of tax administration in Nigeria 31
2.8 Problems of tax administration in Imo State 39
2.9 Tax evasion and avoidance 42
2.10 Prospects of Income Tax Administration 43
CHAPTER THREE
3.0 Research design and methodology 45
3.1 Introduction
45
3.2 Research design
45
3.3 Sources/methods of data collection 46
3.4 Population and sample size 47
3.5 Sample technique
47
3.6 Method of data analysis. 48
CHAPTER FOUR
4.0 Presentation and analysis of data 49
4.1 Introduction
49
4.2 Presentation of data
49
4.3 Analysis of data
50
CHAPTER FIVE
5.0 Summary, conclusion and recommendations 57
5.1 Summary of findings
57
5.2 Conclusion
58
5.3 Recommendations
59
References
60
Appendix 1
Appendix 11
CHAPTER ONE
1.0 INTRODUCTION
Nigeria is
organized by a federal system, hence its fiscal operation adhere to the same
principle. This has serious implications on how the tax system is administered
in the country. In Nigeria the government’s fiscal power is based on a three
tiered tax structure divided between the federal state and local government,
each having a different tax jurisdiction, as at 2003 about forty (40) different
taxes and levies are shared among the three levels of government which are
their sources of revenue.
The Nigeria tax system is lopsided and dominated by oil
revenue. The most veritable tax are handled by the federal government and the
lower tiers are responsible for the less buoyant ones. The federal tax
corporate bodies while state government and local government tax individual
except the residence of federal capital territory, personnel income of police,
armed forces department of foreign affairs which are strictly for federal
government. The federal government on average account for 90% of the overall
revenue annually. In 2005 the breakdown of total tax and levy collection of the
three tiers of government was 96.4 percent for the federal state and 0.6
percent for the local government (Philips) (1997). A major element contributing
to this development was the prolonged military rule that has ignored
constitutional provisions. Indeed because of the various quest of the
government in redistribution of income,
poverty eradication emphasizing the rise in per capital income solving
unemployment problems and reduce inequality which is a breath on the nostril of
a modern government.
Taxation therefore, is a compulsory levy imposed by the
subjects or upon his properties as to up it’s over sight function. The main
purpose of taxation is to raise fund to meet government’s expenditure and
redistribute incomes or wealth and management of the economy. Tax collected
comes back to the people informed of social amenities. As these amenities
increase taxation assure as greater importance since it’s the major source of
government revenue. Taxation encourages savings and regulates expenditure. The
granting of tax relief provides incentives for the private sector; the direct
tax especially the pay-as-you-earn (PAYE) is progressively high so as to
redistribute income of individuals equitably. Some individual regard taxation
as important fiscal measures not only for the benefits it yields to the
government but also because it directly affects this income level and therefore,
their standard of living.
1.1 BACKGROUND OF THE STUDY
Then Nigeria
Inland Revenue which eventually passed through series of transformation was
created in 1943 when it was cut out from the erstwhile Inland Revenue
Department that covered what was then the Anglo-phone West Africa (Including
Ghana, Gambia and Sierra leone) during the colonial era.In 1958, the Board of
Inland Revenue was established under the Income Tax Ordinance of 1958. The name
was later changed in 1961 when the Federal Board of Inland Revenue (FBIR) was
established under section 4 of the company Income Tax Act (CITA).
A further
transformation of the FBIR took place when the finance (Miscellaneous Taxation
Provisions) Act No. 3 of 1993 established the Federal Inland Revenue Service as
the operational arm of FBIR.
The federal
Inland Revenue Service is a statutory body which has the administrative
responsibility for the assessment, collection and accounting for the following
taxes:
Petroleum Profit tax
Companies Income tax
Withholding tax on Compaqnies,residents of the federal
capital territory and Non-residents
Value added tax
Education tax
Capital gains tax on persons, corporate, residents of the
federal capital territory ande Non-residents individuals
Stamp duties on bodies, corporate and resident of federal
capital territory
Personal Income tax of all eligible persons.