ABSTRACT
This study examined “the Procedure, problems and prospects of personal
income tax on revenue in Nigeria (A Case Study of Federal Inland Revenue,
Jigawa State)”. The methodology used in data collection is survey, which
utilized both primary and secondary types of data. Purposive sampling technique
was adopted in selecting a sample of 82 respondents from both employees of state
board of internal revenue service and tax payers in the state. The sample
percentage was used in testing the hypotheses. The study found that tax
avoidance/evasion and complete absences of information technology are serious
problems affecting revenue generation in the state. It recommends that
government should device strict measures in dealing and punishing individuals
engage in tax avoidance and evasion. It should also employ the use of
information technology as it is the only way problems experience in personal
income tax collection can be reduced drastically.
TABLE OF CONTENTS
Title page - - - - - - - - - - -i
Declaration - - - - - - - - - - -ii
Approval page- - - - - - - - - - -iii
Dedication- - - - - - - - - - - -iv
Acknowledgement- - - - - - - - - - -v
Table of contents- - - - - - - - - - -vi
Abstract- - - - - - - - - - - -ix
CHAPTER ONE
INTRODUCTION
1.1
Background of the Study - - - - - - - - -1
1.2 Statement
of the problems - - - - - - - -2
1.3
Objectives of the Study - - - - - - - - -2
1.4 Research
Questions - - - - - - - - -2
1.5
Research Hypothesis - - - - - - - - -3
1.6 Significance
of the Study - - - - - - - - -3
1.7 Scope of
the Study - - - - - - - - -3
1.8
Limitation of the Study - - - - - - - - -4
1.9 Operational
Definition of the Terms - - - - - - -4
CHAPTER TWO
LITERETURE REVIEW
2.0
Overview of the Nigerian tax system - - - - - - -6
2.1 Nature
and definition of taxation - - - - - - - -8
2.2 Nigeria
tax laws - - - - - - - - - -12
2.3 Company
income tax administration in Nigeria administration of the companies income tax
act. - - - - - - - - - - - -16
2.4 The
joint tax board - - - - - - - - - -17
2.5 The
state board of internal revenue. - - - - - - -18
2.6
Imposition of company income tax - - - - - - -19
2.7
Returns, assessment and payment of tax - - - - - - -23
2.8
Problems of company income tax administration - - - - -26
2.9
Conceptual Framework - - - - - - - -27
2.10
Theoretical Framework - - - - - - - - -28
2.11 Empirical
Framework - - - - - - - - -31
CHAPTER THREE
RESEARCH METHODOLOGY
3.0
Introduction - - - - - - - - - -34
3.1 Research
Design - - - - - - - - - -34
3.2 Source of
Data - - - - - - - - - -34
3.3 Population
of the Study - - - - - - - - -35
3.4 Sample Size
and Technique - - - - - - - -36
3.5 Validity of
Instrument - - - - - - - - -37
3.6 Reliability
of Instruments - - - - - - - -37
3.7 Methods
of Data Collection - - - - - - - -37
3.8 Method of Data
Analysis - - - - - - - - -37
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS
AND DISCUSSION
4.0
Introduction - - - - - - - - - -39
4.1
Presentation of Data - - - - - - - - -39
4.2 Test of
Hypothesis - - - - - - - - -46
4.3 Summary
of Findings - - - - - - - - -48
CHAPTER FIVE
SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary
- - - - - - - - - - -50
5.2
Conclusion - - - - - - - - - -50
5.3
Recommendations - - - - - - - - -51
References - - - - - - - - - -53
Appendix - - - - - - - - - - -55
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
Every country in the world tends to
generate income through tax administration. In Nigeria the company income tax
administration aims and tries to tax each company in the state more
effectively. However the level at which the company income tax Administration
in Nigeria tend to achieve its desired goals and objectives depends mostly on
the tax office and the company that is operating in Jigawa State.
For the tax Administration in Nigeria
to be effective the aspect of the companies been taxed should be considered
adequately and more accurately so that the company would provide reliable
financial performance information for assessment. In which the federal
government derives its income.
Due to the ever changing tax
administration policies in the country and modifications in the aspect of
taxation in Nigeria some companies want to stay afloat and employ all kind of
strategies that benefits them. Some of them evade tax and some avoid tax.
When tax in Nigeria is paid by the
various companies operating in the state the revenue collected are used to
provide utility services and providing additional government services such as
in education and transport which are of great importance to the growth of the
economy of the state and to the country.
Tax administration in the country is
a very important aspect that assist in the provision of revenue to the economy
of which the avoidance of tax payment by the companies in the country in
general and in Jigawa State in particular will result to a serious damage to
the revenue which should have been generated and used for the provision of
infrastructure.
When a company is been taxed by the
federal board of inland revenue (FBIR) the company is meant to give an accurate
information about their income but some companies go to the extent of forgery
in provision of their documents which gives an incorrect information to the
board, thereby causing reduction in their tax assessment.
Based on the above observation or
trend of this action over time this study set out to examine the problems and
prospects of the company income tax administration in Nigeria and in Jigawa
State to be precise.
1.2 STATEMENT OF PROBLEMS
The tax administration (collection
and assessment of tax from companies is a difficult task. The assessment and
collection of companies’ income tax as at when due has been a problem associated
with company income tax administration in Nigeria. These problems through observation
have been influenced by the following understated factors.
Fraudulent under-declaration of
income and making of incorrect returns by companies coupled with collusion of
officials of FBIR staff with company under assessment. The problem of tax evasion
is real and so much in Nigerian economy where individuals and companies use all
means to evade tax.
The fact that the federal board of
inland revenue (FBIR) is unable to bring their entities within the letter of
the law is of a serious concern mostly in the area of highly government
spending borrowing and when there is pressing need to improve revenue
generations from all sources including taxation. The problems of revenue losses
to government due to fraudulent and illegal deals from her citizens and organisations
within the country prompt the need for this research work.
1.3 RESEARCH OBJECTIVES
i.
To ascertain whether sharp practices in administration
between the staff of FBIR and assess company contributed to tax evasion
ii.
To ascertain if there is any variation between
financial statement used for AGM and that sent to FBIR for tax administration
iii.
To ascertain whether loss of confidence in government
officials has contributed to tax evasion.
1.4 RESEARCH QUESTIONS
For the purpose of this study the
following question were raised for an indept study of this research work;
i.
What extent has sharp practices in administration
between the staff of the FBIR and assess company contributed to tax evasion?
ii.
What extent has there been variation between financial
statement used for AGM and that sent to FBIR for tax administration?
iii.
Has loss of confidence in government officials
contributed to tax evasion?
1.5 RESEARCH HYPOTHESIS
HYPOTHESIS ONE
H0:
Sharp practices in tax administration between the staff of FBIR and assessed
company does not contributes to tax evasion
H1:
Sharp practices in tax administration between the staff of FBIR and assessed
company contributes to tax evasion
HYPOTHESIS TWO
H0:
There is variation between the financial statement used for AGM and that used
for tax administration of assessed company.
H1:
There is no variation between the financial statement used for AGM and that
used for tax administration of assessed company
HYPOTHESIS THREE
H0:
The loss of confidence in government does not contribute to tax evasion
H1:
The loss of confidence in government contributes to tax evasion.
1.6 SIGNIFICANCE OF THE STUDY
The result of this study will throw
more light on the problems of companies’ income tax administration in Jigawa
State Nigeria. The special emphasis on the federal Board of Inland revenue
(FBIR) will highlight peculiar problems and difficulties in administering the
companies’ income tax would increase the revenue generation of the government.
1.7 SCOPE AND LIMITATION OF THE STUDY
This study shows the problems and
prospect of Nigerian company tax with Jigawa State Federal Board of Inland
Revenue as the case study. The period covered by this research enabled the
research to be reliable.
Limitation
This research study is limited to
detailed study of (FBIR) and the relevant Act setting it up with particular
emphasis on the overall administration of the act in Jigawa State.
Gathering of relevant data for this
study was a hectic task it is also expected that there will be limited mostly
in areas of questionnaire distribution answering the question sincerely and
returning them (especially the tax officials) due to fear of the unknown.
1.9 THE OPERATIONAL DEFITION OF
TERMS
Assessment Authority: This is the body appointed by the board for the purpose of assessing tax
payable.
Company: A
company is defined by section 3(1) of the act as “any cooperation (other than a
corporation sole) established by or under any law in force in Nigeria or elsewhere”.
The relevant tax authority in respect of company income tax is the Federal
Board of Inland Revenue.
Companies Income Tax: This is the tax imposed on the profit made by companies.
Efficiency and Effectiveness: Horngreen (1984) defines efficiency as an optimum relation
between input and output whereas effectiveness is the accomplishment of
pre-date runnined objective. Tax collected can only be said to be effective
when a high proportion is actually collected. Similarly for efficiency and
assessment should be less than the revenue accruing from such expenditure.
Federal Inland Revenue Service (FIRS): This is the body set up by section 5.1 of ITA (1979)
and charged with the overall administration of companies income tax act.
Income: There
is no statement that defines the word `` income`` in taxation status. However,
for the purpose of this study reference is made to section 5.4 (2) (6) of
income tax management act (ITMA)1961, which recognizes income as including any
amount deemed to be income under the act.
Tax Arrears: These
are assessment of tax during the preceding period whose payment are received at
the current assessment period.
Tax Avoidance: This
is the arrangement of the affairs of the tax payer in such a way as to reduce
tax payable. Tax avoidance is not a criminal or crime punishable under the law.
This was clearly stated in Lord Tumbling declared as follows in his judgment every
man is entitled to order his affair so that the tax attached under the
appropriate tax act is less than is otherwise would be. According to Longman
Dictionary of contemporary English, tax avoidance are Legal way of paying less
tax.
Tax Base: This
is simply that object on which tax should be imposed or applies.
Tax Evasion: Is
a fraudulent, dishonest intentional distortions or concealment of fingers by
the tax payer in order to reduce the tax payable. It is a criminal and
deceitful was of not paying tax or reducing ones tax liability. These offences
are punishable under law.
According to Longman
Dictionary of contemporary English Tax evasion are the illegal ways of paying
less tax.
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