IMPACT OF EFFECTIVE TAX ADMINISTRATION ON NIGERIA ECONOMY.
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IMPACT OF EFFECTIVE TAX ADMINISTRATION ON NIGERIA ECONOMY.
Chapter one
INTRODUCTION
1.1 Background of the Study
Tax administration entails both the understanding of tax legislation and the enforcement of the requirements. Referring to Agbetunde L.A.’s textbook “Nigerian Personal Income Tax” (2004).
Tax administration existed in Nigeria prior to our colonisation. It began in the north, when colonialists consolidated and codified existing taxation in 1902. The colonialists accomplished this through different policy restrictions enshrined in the Native Court Regulation (1902) and Native Revenue Proclamation.
Following the merger of the Northern and Southern provinces in 1914, the Native Revenue Ordinance was passed in 1917 in the north and 1918 in the south. The problem was that these rules only applied to select areas of the country.
In 1951, the Raisman Fiscal Commission was established to investigate fiscal concerns and help the government handle problems of inconsistency and misunderstanding that were not addressed by existing legislation.
The Raisman Commission recommended consistency in taxation, based on a modern tax structure, which was included in the 1960 constitution.
This was made legislation under the Income Tax Management Act (ITMA) of 1961. This Act provided for the administration of both individual and corporate taxes; as a result, the role of local governments in tax administration was gradually reduced, with the focus shifting to the federal and state governments. Personal Income Tax (PIT) is administered by both the federal and state governments.
More revisions were implemented as a result of the constitutional reforms of 1963, 1979, and 1989, as the federal government assumed increasing responsibility for tax administration. The Act was further amended in 1979 and the 1990 constitution.
1.2 Statement of Problem
Here, we shall examine the effectiveness of tax administration in Nigeria. Tax administration faces numerous challenges, including the failure to remit taxes collected by agents on schedule.
Another issue is that some organisations fail to register and pay taxes as required by law, as do some professions such as lawyers, accountants, and estate agents, to name a few.
1.3 The Purpose of the Study
According to Prince Adejuwon Jonathan, in the textbook “Analysis of Taxation”. This initiative aims to provide information on the impact of effective tax administration on the Nigerian economy. Here are some information that may help you comprehend the execution of taxes in Nigeria:
i. Tax is paid by all chargeable individuals and organisations.
ii. The tax levied on the income of individuals other than corporations is known as “Personal Income Tax (PIT).” Individuals’ income (either as an individual or in partnership) from sources such as employment, trading, and business are subject to this tax.
iii. The tax is at 10%.
iv. Companies registered in Nigeria under CAMA are assessed a 30% tax on the company’s taxable profit.
v. Petroleum profit tax is a tax levied on taxable profits earned by petroleum businesses operating in Nigeria.
vi. Records and accounts must be preserved.
vii. The Federal Inland Revenue Service (FIRS) Tax Directorate provides free tax information and consultation services.
1.4 Significance of the Study
The purpose of this research is to educate the public on what tax administration is all about and to design a number of measures to tackle these issues.
The challenges discovered in tax operation and administration that the research intends to address include tardy remittance of tax by agents because most collecting agents seek to keep the money received, difficulties in obtaining a statement of account, and untimely reconciliation of such an account.
Tax operation and administration in Nigeria are seriously under examination due to the failure of several organisations to register and collect tax as required by law; these include major parastatals and statutory corporations of the government such as Nigeria Post Plc and Nigeria Railway Corporation. This research will also help to ensure that tax operations and policies are properly implemented if all parastatals are privatised.
1.5 Hypothesis.
Hypotheses are prepositional statements about the existence, size, form, differences in relationships between, or distinctions among some variables. To appropriately direct this investigation, various hypotheses are formulated, which are as follows:
Inform about the null hypothesis (H0) and alternative hypothesis (H1).
i. H0: Tax administration does not boost Nigeria’s economy.
H1: Tax Administration has benefited Nigeria’s economy.
ii. H0: There are no concerns with tax administration in Nigeria.
H1: There are numerous concerns with tax administration in Nigeria.
iii. H0: Agents in Nigeria fail to remit taxes collected on schedule.
H1: Agents in Nigeria collect and remit taxes on schedule.
iv. H0: Tax operations and administration in Nigeria do not merit inquiry.
H1: Taxation operations and administration in Nigeria require study.
1.6 Limitations of the Study
The limitations of this research study may include the following:
i. Time constraints: The research study is being completed concurrently with the earning process in the classroom. This means allocating limited available time between the two pursuits. As a result, time constraints limit the scope of the research investigation.
ii. Financial Constraints: Because the financial requirements of a research project are huge, my limited funds may not be sufficient to complete the investigation as planned.
iii. Other Constraints: These include limitations imposed by analysts, experts, and other perso
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ns who may be approached during the course of the study for their perspectives on the issue.
Despite the limitations mentioned above, I hope that the study will serve as a wake-up call to the country’s need for competent tax administration.
1.7 Definition of Terms
This topic will include several definitions of words. They include the definition of:
i. Tax
2. Tax Consultants
iii. Tax Clearance Certificate.
IV. Tax Evasion
v. Assessment Notice.
According to Adesola S.M. (1998), Tax Law and Administration.
He defined the preceding concepts as:
i. Tax: This is a mandatory levy imposed by the government authority through its agent on the person or his property in order to attain certain goals. It is paid without expecting anything in return.
2. Tax Consultants
These are tax professionals who provide expert assistance to both the tax authority and taxpayers. Commissions or fees are levied for the services provided.
iii. Tax Clearance Certificate.
This is a document issued by the tax authority at the request of the taxpayer when it is satisfied that the taxpayer has paid all of his taxes for the three years before the current year of assessment or that no tax is payable on that person’s income.
IV. Tax avoidance.
This is an illegal attempt to avoid tax liability (totally or partially) by breaching the law. It stems from inefficient tax administration.
v. Assessment Notice.
This is a notification made by the tax authority and delivered on or mailed by registered post to each taxable individual whose income is subject to tax. It specifies the amount of income assessed, the amount of tax levied, and where to pay the tax.
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