of today has a lot of ways of generating income or revenue to facilitate or
finance its project, which may be difficult for individuals or corporate bodies
to provide .Government income, is incomplete without sourcing from its citizen,
companies and residual in its geographical location. Taxation may be defined as
a compulsory levy imposed by the government on individual, corporate bodies,
government parastatals; goods and services to enable government provide
essential services to the citizens and also as instrument to stabilize economy.
aim of this research project is to examine Company income tax Administration in
Nigeria problem and solution using (Federal Inland Revenue Services as a case
conducting this research work, the researcher used both primary and secondary
data to gather relevant data. Questionnaire (both opened and closed ended
questions) were administered to Federal Inland Revenue Service in Lagos State
to source for relevant information that can used to provide solution to the
problem under study. Interview was also used by the researcher where necessary.
Secondary data used for this research were gathered from textbook, journals,
handbooks and internet. Data collected was analyzed using frequency, simple
percentage and Chi-square to test the hypothesis. The empirical result of this
research project reveals that there is no effective and good operating tax
policy in company income tax administration in Nigeria and that Taxes collected
from companies are not used for economic development of the nation (Nigeria).
TABLE OF CONTENTS
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Limitation of Study
1.5 Statement of Research questions
1.6 Research Hypothesis
1.7 Significance of the Study
1.8 Scope of the Study
1.9 Definition of Terms
Definition of Company Income Tax
Administration of Company Income Tax
2.3 Basis of
Assessment of Company Income Tax Liability
Chargeable Income and Income exempted from Tax
relieves and allowances granted to Companies
Allowable and Disallowable Expenses
Companies' Profit exempted from Taxation
Problems of Administration of Company Income Tax
of the problems on Taxation in Nigeria
Strategies employed by Companies to escape Tax
3.1 Research Design
3.2 The Population of the Study.
3.3 Sample Size and Sampling
3.4 Method of Collecting Data
3.5 Method of Data Analysis
DATA PRESENTATION AND DISCUSSION OF FINDINGS
Discussion of Findings
of Validity and Reliability Test
SUMMARY OF FINDING, RECOMMENDATION AND CONCLUSION
TO THE STUDY
It is not an overstatement that taxation plays a
prominent role in the economy of any nation as one of the major means of
generating revenue. In the past government derived more revenue from Company
Income tax compared to any other sources of revenue but now reverse is the case
and this is due to the ineffectiveness of the administrative machinery of
Company Income Tax .i.e., Federal Inland Revenue Service (FIRS), the government
policy and the conduct of the tax payers.
It was also observed by the Federal Inland Revenue
Services (FIRS) that many Companies are in the habit of evading company income
tax payment and this attitude has slowed down the growth of economy of the
However, the various taxes collected by the government
particularly the company income tax are used to provide social amenities like
water, electricity, good road network, education, health care services and many
more which in tum promote the standard of living of the citizens and residents
of a nation. Without prompt payment of tax by the companies and other tax
payers, the government may not be to fully play its expected roles to the
citizens. In many of the developed and underdeveloped countries taxation has
been the major source of revenue to the government unlike Nigeria where all
attention is being concentrated on crude oil as the major source of income to
Furthermore, taxation is a yardstick by which government
regulates production and consumption of goods and this role attests to how
taxation contributes to the growth of a national economy but the reverse is the
case in Nigeria system. The partial neglect of this source has turned the
economy of the country into mono-economy and the revenue from this source can
also be regarded to as mono-revenue.
In a tax system, the company income tax is a form of
direct tax which the taxpayer themselves bear the burden. This is the reason
why some companies try to evade the payment of such taxes compare to the
indirect form of taxes in which the burden is transferable. This means that the
final users of such goods bear the burden of such taxes indirectly.
Hence, many companies avoid tax or completely evade tax
thereby reducing the total revenue of the government.
OF THE PROBLEM
In order for government to provide or perform its
function to the society, there must be some means of imposing levy on
individual and enthies: profit and income, and one of this is throughcompany
income tax. In view of these, many business, government and Federal Inland
Revenue Service have contributed to the problem being faced .by this source of
revenue and some of those problems are:
There is no
effective and good operating tax policy of company income tax
There is no
thorough inspection of companies on the relief to be claimed by the Federal
Inland Revenue Service.
There is no
effective 'Communication network between the Federal Inland Revenue Service and
4. Government does not show full concern to company income tax.
There is no severe
punishment and fine for company that fails to register, make returns or evade
6. Inconsistent government policy on the administration of company income
OF THE STUDY
The objective of the study is to determine the problem of
company income tax administration in Nigeria and the proposed solution or way
out to such problem.
During the course of carrying out this research work,
researchers were faced with financial constraint, and this is why it was not
possible to travel to other states of the federation where offices of Federal
Inland Revenue Service are located to collect some other needed or necessary
So, the findings were only restricted to the Federal
Inland Revenue Service (FIRS) Ikeja branch of Lagos State.
Also, there was problem of restricted information,
because some of the staff of the Federal Inland Revenue Service (FIRS), Ikeja
was reluctant to fill the questionnaire administered to them while some refused
to fill the questionnaire at all
OF RESEARCH QUESTION
The research work will attempt to answer the following
Does the government
show full and adequate concern to company income tax as a source of revenue?
Is the federal
Inland Revenue Service (FIRS) thoroughly investigate the reliefs claiming by
Is there any form
of training and seminar for the personnel of Federal Inland Revenue Service?
Is the Federal
Inland Revenue Service educating and informing the companies at the appropriate
Is there any good
communication contact between the Federal Inland Revenue Service and Corporate
Affairs Commission (CAC)?
Does the Federal
Inland Revenue Service and the government work hand in hands to ensure that new
companies and unregistered ones are registered?
Is there any
penalty or fine for any company that failed to be registered, make returns or
.Does the Federal
Inland Revenue Service ensure prompt collection of tax as at when due?
H0 (Null hypothesis): There is no effective
and good operating tax policy of
company Income Tax administration in Nigeria.
Hi (Alternative Hypothesis): There is an
effective and good operating tax policy
of company income tax administration
(Null hypothesis): Taxes collected from companies are not used for economic development of the
H1 (Alterative Hypothesis): Taxes collected
from companies are used for economic
development of the nation.
hypothesis): FIRS and government does
not work hand in hands to ensure that new companies
and unregistered ones are dully registered with FIRS for tax purpose.
H (Alternative Hypothesis): FIRS and government work hand in hands to ensure that new companies
and unregistered ones are dully registered with FIRS for tax purpose.
1. 7 SIGNIFICANCE
OF THE STUDY
Since this study shed light on the administration of
company income tax in Nigeria, the author humbly believes that the study will
be of immense benefits to the government and administrative machinery (Federal
Inland Revenue Service) in reforming the tax policy.
It would also enable the various companies who are paying
company income tax to get good orientation on the importance of taxation and
thereby stop evading tax.
1.8 SCOPE OF THE
This study looks at the administration of company income
tax in Nigeria. In the light of this, the study will focus on companies within
Lagos State. The companies and individual to be covered in this research work
Authority (Federal Inland Revenue Service Ikeja Office, Lagos)
ii. Tax payers (Companies)
iii. Tax Consultants
1.9 DEFINITION OF
Tax: It can be
defined as money or charged compulsory levied or imposed by a public authority
on the income of individuals and companies as stipulated by the government decrees, acts, or case law irrespective of
the exact amount of service rendered to payer in return.
This is the process or method of calculating and assessing an individual and
companies as to the amount to be paid as tax liability.
Administration: This is the part of management which is concerned with the installation
and carrying out the procedure by which, the programme is laid down and
progress of activities is regulated and checked against plan.
Objective is an offspring of the mission statement of an organization which
entails the breakdown of attainable goals a firm seek to attain and constitute
the principal reason for a finn's existence.
This is a form of tax levied by government on the income and revenue of
individuals and companies in which the burden is not transferable. Examples are
Personal income tax, Pool betting tax, Capital gain tax, Companies' income tax,
Education tax, Withholding tax and Petroleum profit tax.
This is a form of tax imposed by the government on the value of goods and
services. The incidence of payment falls on the tax payer while the real burden
is shifted to the final consumer. Indirect taxes are only payable on
consumption e.g. Value Added Tax (VAT), Import and Export duties, Custom
This is a deliberate act on the part of the taxpayer not to pay tax due. It is
a criminal act under the tax law because it is illegal.
This refers to the legal means by which the taxpayers minimized their tax
liabilities by taking the advantages of the loopholes in tax laws and
Ola, C.S (1981): Income Tax
for COll'Orate Bodies in Nigeria :Heinmann Educational Books, Ibadan
Seyi,Ojo (2003): Fundamental
Principles of Nigeria Tax •• :Sagribra Tax?ublications, Lagos