ABSTRACT
This project develops the Main reasons
for the emergence of such a market are tax avoidance through debt shifting and
the existence of institutional weaknesses and financial frictions across host
countries. The serves to derive hypotheses regarding the role of local versus
foreign characteristics such as profit tax rates, lack of institutional
quality, financial underdevelopment, and productivity for internal debt at the
level of a given foreign affiliate. The paper assesses hypotheses in a panel
data-set covering the universe of Agip oil company multinational firms and
their internal borrowing. Numerous novel insights are gained. For instance, the
tax-sensitivity found in this paper is many times higher than previous research
suggests. This accrues mainly to three things: the consideration of the
boundedness of the internal debt ratio as a dependent variable in comparison to
its treatment as an unbounded variable in most of the previous work; the
coverage of all (small and large) multinationals here rather than a focus on
large units in previous work; and the inclusion of endogenous characteristics
in other countries multinationals are invested in (due to endogenous weights)
while previous work did not consider such effects at all or assumed them to be
exogenous. Moreover, local and foreign (at other locations of a given
affiliate) market conditions matter more or less symmetrically and in the
opposite direction.
TABLE
OF CONTENTS
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVE OF THE STUDY
1.4 RESEARCH QUESTION
1.5 STATEMENT OF HYPOTHESES
1.6 SIGNIFICANT OF THE STUDY
1.7 SCOPE OF THE STUDY
1.8 LIMITATION OF THE STUDY
1.9 DEFINITION OF TERMS
CHAPTER
TWO
2.0 LITERATURE REVIEW
2.1 HISTORICAL BACKGROUND OF AGIP
2.2 WHAT IS TAXATION
2.3 PRINCIPLES OF TAXATION
2.4 TYPES OF TAX
CHAPTER THREE
3.0 RESEARCH
METHODOLOGY
3.1 RESEARCH
DESIGN
3.2 SOURCES
OF DATA COLLECTION
3.2.1 PRIMARY
DATA
3.2.2 SECONDARY
DATA
3.3 POPULATION
OF THE STUDY
3.4 SAMPLE
SIZE
3.5 SAMPLING
TECHNIQUE
3.6 METHOD
/ INSTRUMENT OF DATA COLLECTION
3.7 METHOD
OF DATA ANALYSIS
3.8 VALIDITY
OF STUDY
3.9 RELIABILITY
OF THE STUDY
CHAPTER FOUR
DATA
PRESENTATION, ANALYSIS AND INTERPRETATION
4.0
INTRODUCTION
4.1
DATA
PRESENTATION AND RESULT
4.2
ANALYSIS
OF QUESTIONS
CHAPTER
FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY OF FINDINGS
5.2
CONCLUSION
5.2
RECOMMENDATION
BIBLIOGRAPHY
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Tax and internal borrowing is a
financial issue and its payment is a civil duty. It is the imposition of a
financial burden for the government on individual firm and companies and a
process of borrowing in which a word is copied from a non-standard variety into
the standard language (cf. Görlach 2001: 158). For lack of prestige, dialect
words are often not considered dictionary-worthy, but eventually some items may
become fully integrated in the standard variety, typically without the speakers
being aware of their origin respectively.
In general based, the word tax means any
contribution imposed by the government upon individual and companies for the
use of government to provide facilities or services as rendered by the state.
It is not a voluntary payment or donation but an enforced contribution made on
the pronouncement or directive of legislative authorities.
Osita (2004:1) stated, taxation may be
define as the compulsory leave by the government through it's various agencies
in the income, capital or consumption of it's subject such as salaries,
business profits, interest, dividends, commission regularities, rent etc.
It could be said that there are three
main methods of financial economic expedition open to meet developing countries
there are:-
(a) LOANS
(b) GRANT
(c) TAX
AND OTHER CURRENT RECEIPT
Of these sources, tax is perhaps the
most important since the level of government expenditure is to a great extent
dependent on the ability of the tax system to generate the required revenue at
the disposal of the government.
In spite of this benefit from tax most
people still indulge in corporate tax and internal borrowing. Attempt to avoid
some portion of liability or not to pay tax will affect the revenue of the
government that is the reason why the government frown at the issue of corporate
tax and internal borrowing, and uses it's authorities to enforce compliance.
ARONOMOLE and OLUWALAYODE (2006:39).
Define tax avoidance as legal ways by which a tax payer reduces in tax
liabilities.
Tax evasion is a deliberate on the part
of the tax payers to reduce their tax liabilities through illegal means or an
attempt not to pay tax due.
The distinction between this tax
avoidance and tax evasion is that tax avoidance is not considered a criminal
offence where as tax evasion is a criminal offence.
According to ANYAELE (1990:225) a tax
may be defined as a compulsory contribution imposed by a government authority
on goods, individual and co-operate bodies irrespective of the exact amount of
services rendered to the tax payer in return and not imposed as a penalty for
our legal offence. Both direct and indirect taxes that are collected for the
government inform of income tax, exercise duty, import and export duties.
Purchase and sales taxes and so on help the government to generate a lot of
revenue for the smooth administration in the nation.
There are two elements in every form of
taxation and that is the BASE AND RATE. The tax base is the object which is
taxed or a measure of the private sector income or wealth that can be taxed,
while the tax rate is the percentage of the measured amount taken off from the
tax base. In this case the money realized from it is used to provide social
goods and services, so that everybody both the rich and poor will have equal
chances of making use of them, that is the goods and services. They include
pipe borne water, electricity, good roads, hospital, schools etc. most people
in Agip oil company has the habit of evading or avoiding tax payment i.e. they
always avoiding paying their taxes. With this state of affairs the various tier
of government in the Agip oil company don't usually generate enough revenue
which will enable them to effectively execute all the development projects
which are highlighted in their budgets.
It has to be pointed out that the
successive Agip oil company governments have not made adequate and sincere
efforts toward informing the tax dodger or evader on the need for them to pay
the taxes. All attentions have been directed on the revenue from oil sector
while taxes and agriculture, which supposed to be generating a lot of revenue
to the Agip oil company, are deliberately over looked.
Also the researcher wants to look into the
problems of paying tax by the public, such problem are as follows
a) corporate
tax and internal borrowing by the public
b) Poor
system of tax collection
c) Inability
of the government to prosecute tax avoidance.
1.2 STATEMENT OF THE PROBLEM
It has been noted that tax system in Agip
oil company has come to play a significant role, as a major source of revenue
to the federal government by way of imposing tax on tax payers and it is for
them to pay up the tax.
The act of evading and avoiding tax by
most registered companies and some individuals has however affected the revenue
base of the government especially in providing essential services in the
society. People naturally prefer to reduce their tax liabilities by
deliberately overstating their expenses and make false entries and fictions in
their books of account. Thus, their act however, causes tremendous reduction in
the revenue accruable to the government which eventually shrinks revenue to the
treasure of government.
The inability of the revenue board to
collect substantial amount of money from tax is as a result of evasion and
avoidance of tax. This research work examines the problems facing the revenue
department in collecting taxes and levies under their jurisdiction with a view
to indentifying possibilities at minimizing or even eradicating corporate tax
and internal borrowing.
1.3
OBJECTIVE OF THE STUDY
The objectives of this study are as
follow
1. To analyze the various causes of corporate
tax and internal borrowing
2. To
identify the factors or problems militating against the tax assessment and
collection in Agip oil company.
3. To
identify possible effects of the corporate tax and internal borrowing on the
economic development of the Agip oil company and Agip Oil Company Port-harcult
in particular.
4. To
analyze the effectiveness and flaws of various tax in the Agip oil company
5. To
examine ways in which corporate tax and internal borrowing can be reduce with
the new reforms.
6. To
examine tax reforms in Agip oil company
1.4
RESEARCH QUESTION
For this research work to be effective
it please the researcher to ask the following question
1. What
are the causes of corporate tax and internal borrowing
2. What
are the factors or problems militating against the tax assessment and
collection in Agip oil company?
3. What
are the possible effects of corporate tax and internal borrowing economics
development of the Agip oil company
4. Are
tax laws in the Agip oil company effective
5. Have
new tax reforms reduce corporate tax and internal borrowing and tax avoidance
in Agip Oil Company
6. Do
the loopholes in the tax laws encourage corporate tax and internal borrowing in
Agip Oil Company?
1.5
STATEMENT OF HYPOTHESES
To aid the research work the following
hypotheses has been postulated, the mill hypothesis is denoted by
"Ho" while the alternative hypotheses is denoted by "HI"
H0: There is a relationship between
tax/internal borrowing and multinational firm
H1: there is a relationship between
tax/internal borrowing and multinational firm
1.6
SIGNIFICANT OF THE STUDY
The research would also help the
professional bodies like the chartered institute of taxation of Agip Oil
Company and the institute of chartered accountants of Agip oil company as well
as their members to see the areas of deficiency in the collections and call for
improvement in tax revenue.
This research would also be relevant to
the future researchers and the dents of accounting, economic, business
administration and other social and management sciences as well as the
legislations which will also benefit immensely from this research because it
will form basis of tax policy formation, implementation and administration.
1.7 SCOPE OF THE STUDY
Since no single research can validly
cover all areas of the topic the researcher tends that thrust of this project
will be limited within the scope of how tax payers performance on tax are
influenced by the choice of its tax system. The study will focus primarily on Agip
Oil Company Port-harcult to be precise to enable the researcher carryout on
extensive investigation on this subject. The state to be studied is: Agip Oil
Company Port-harcult.
1.8 LIMITATION OF THE STUDY
It is not unusual for research to
encounter some difficulties in course at their research and these may include.
1. FINANCE:
This is always a major limitation in a study of this nature, since the
individual may not have enough money to carryout all the necessary research.
2. LACK
OF DATA: There are areas where data is available but which the researcher
cannot lay hands on because the relevant information is sometimes termed
confidential and unavailable to outsiders.
3. LACK
OF CO-OPERATION:- By some of the respondents whom he administered certain
copies of his questionnaire and vocal interview.
4. Delay
in giving back its him some of the copies of the questionnaires for some of the
respondents.
1.9
DEFINITION OF TERMS
In order to aid understanding of this
research work by the user, special term used in this study are defined,
1. TAX: This is a compulsory
contribution imposed by government on individual and corporate bodies for the
use of government to provide facilities or service in the nation.
2. TAX
EVASION: This is the attitude adopted by tax payers to deliberately
misrepresent the true state of their affairs to the tax authorities or include
dishonest tax report such as declaring less income, profit or gains to escape
tax liability (wholly or partially) by breaking the law.
3. TAX
AVOIDANCE: This is a legal way by which a tax payer reduces his tax
liabilities.
4. TAX
LIABILITY: This is the amount that is borne by the tax payer
5. PAYE(PAY
AS YOU EARN): _This type of tax is based as the earning of the tax payer.
6. CAPITAL
GAIN TAX: This is the type of tax that is based on the gain realized from the
sale of capital goods.
7. CORPORATE
TAX: This is the type of tax that is based on the profit a company.
8. CASINO
REVENUE: This is the amount of the levy paid by people who operate at public
being rent to gambler or for other amusements.
9. TAX
LAWS: These are acts decree or regulations guiding the assessment and
collection of taxes in the Agip oil company.
10. STATE
INLAND REVENUE: The body responsible for the collection of tax at state level.
11. FEDERAL
INLAND REVENUE: The body responsible for the collection of tax at federal level
12. REVENUE:
Amount of money realized by an individual or group or company
13. PERSONAL
INCOME TAX DECREE 1993: The law guiding the assessment and collection of
personal income tax
14. COMPANY
INCOME TAX ACT 1990:U The law regulating the assessment and collection of tax
of corporate bodies.
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