Studypadi logo

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 Abia 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.

2

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 Abia 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 Abia 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 problem

through observation has been influenced by the following understated factors.

3

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

1. To ascertain whether sharp practices in administration between the staff

of FBIR and assess company contributed to tax evasion

2. To ascertain if there is any variation between financial statement used for

AGM and that sent to FBIR for tax administration

3. To ascertain whether loss of confidence in government officials has

contributed to tax evasion.

4

1.4 RESEARCH QUESTIONS

For the purpose of this study the following question were raised for an indept

study of this research work;

1. To what extent has sharp practices in administration between the staff of

the FBIR and assess company contributed to tax evasion

2. To what extent has there been variation between financial statement used

for AGM and that sent to FBIR for tax administration

3. Has loss of confidence in government officials contributed to tax evasion

1.5 RESEARCH HYPOTHESIS

HYPOTHESIS ONE;

Ho:- 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;

Ho:- There is variation between the financial statement used for AGM and that

used for tax administration of assessed company.

5

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 STUDY

The result of this study will throw more light on the problems of companies’

income tax administration in Abia 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 OF THE STUDY

This study shows the problems and prospect of Nigerian company tax with

Abia State Federal Board of Inland Revenue as the case study. The period

covered by this research enabled the research to be reliable.

6

1.8 LIMITATION OF THE STUDY

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

Abia 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.

1. ASSESSMENT AUTHORITY:- This is the body appointed by the board

for the purpose of assessing tax payable.

2. COMPANY:- A company is defined by section 3(1) of the act as “any co-

operation(other than a corporation sole) established by or under any law in

force in Nigeria orelsewhere”. The relevant tax authority in respect of

company income tax is the Federal Board of inland revenue.

3. COMPANIES INCOME TAX:- This is the tax imposed on the profit made

by companies.

4. 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

7

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.

5. FEDERAL INLAND REVENUE SEVICE (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.

6. 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.

7. TAX ARRERS:- These are assessment of tax during the preceding

period whose payment are received at the current assessment period.

8. 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 judgement

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.

8

9. TAX BASE:- This is simply that object on which tax should be imposed

or applies.

10. 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.

9

Project Information

  • Price

    NGN 3,000
  • Pages

    88
  • Chapters

    1 - 5
  • Program type

    barchelors degree

Additionnal content

Abstract
Table of content
References
Cover page
Questionnaire
Appendix

HOW TO GET THE COMPLETE PROJECT ON the problems and prospects of company income tax administration in nigeria INSTANTLY?

  • Click on the Download Button below
  • Fill in your card details with our SECURE payment partner
  • Your project downloads automatically upon successful payment
  • Chat with Our Instant Help Desk on +234 8039 416 816 for further assistance

Related topics