COMPANIES INCOME TAX ADMINISTRATION IN NIGERIA; PROBLEM AND PROSPECTS A CASE STUDY OF THE FEDERAL INLAND REVENUE SERVICES OWERRI AND ORLU

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.