The problem of tax evasion and tax avoidance in nigeria. However, tax avoidance is equally complex and expensive exercise. Tax avoidance and tax evasion both are meant to reduce the tax liability ultimately but what makes the difference is that the former is justified in the eyes of the law as it does not make any offence or breaks any law. One measure of the extent of tax evasion the tax gap is the amount of unreported income, which is the difference between the amount of income that should be reported to the tax authorities and the actual amount reported. The concept of taxation has been a concern of global significance as it affects every economy irrespective of national differences oboh etal. Because uni hasnt officially started yet this is how i like to spend my days letting dissertation research come to a slight standstill while i readjust to having to do my own cooking and cleaning, and enjoying spending some much needed downtime. Literature revealed that tax avoidance and evasion. The results of the analysis revealed that the low quality of the service in return for tax does significantly influence tax avoidance and evasion in nigeria. This study assessed the factors that influenced tax evasion in gombe state a state in. Transfer pricing as a vehicle in corporate tax avoidance. Scribd is the worlds largest social reading and publishing site.
To solve the research problem, both primary and secondary data were collected. Yet african countries continue to experience low tax revenue, hence declining economic growth. The role of multinational companies in tax evasion and tax. Department of accounting and finance faculty of management sciences, lagos state university, lagos, nigeria eaddress. Pdf this paper has dealt with the incidence of tax evasion and how. Tax evasion and tax avoidance are pervasive at national levels, but globalisation 8 has made these practices more complex. The effect of tax evasion and avoidance on nigerias. Stockingtease, pages hunsyellow, kmart, msn, microsoft, noaa 4. May 19, 2017 law plays a significant role in fulfilling this. Impact of electronic taxation on tax evasion and avoidance a. This paper attempts to look at tax evasion and avoidance and the approach of the nigerian courts and legislature. Tax evasion and tax avoidance as opine by adebisi and gbegi 9 are one of the main problems of tax system in nigeria and africa and are described as twin devils which cause the difference between actual corresponding author. Factors influencing tax evasion in gombe state nigeria future.
Taxation is process on machinery by which group or communities made contribution from their inc. Therefore, this study examined the factors that are influencing tax evasion and tax avoidance in nigeria. Tjn has been instrumental over the past 10 years in making people understand that paying taxes is key to building a civilised society, that tax evasion and tax avoidance. However, despite the government efforts to bridle the practices of tax evasion and tax avoidance in nigeria, the problem still persists. Tax evasion is an activity commonly associated with the informal economy. Chapter 8 tax avoidance and tax evasion iarc publications. Tax evasion and avoidance both have negative implications on the economy as they. Judicial and legislative approaches to tax evasion and avoidance.
In the words of auru, tax avoidance is the arrangement of a business financial year and the timing of tax and duty payment so as to reduce overall tax liability. International journal of business and social science. While the law regard tax avoidance as a legitimate game and tax evasion is seen as immoral and illegal. The study examines the effect of tax avoidance and tax evasion on personal income tax administration in nigeria. Tax avoidance is the legal usage of the tax regime in a single territory to ones own advantage. Tax evasion and tax avoidance, a problem which seems to have defied solution, had.
Judicial decisions on legality of tax avoidance have ensured that there is no stigma for indulging in the tax avoidance as it is for tax evasion. Definition of tax administration in the dictionary. The study of the effects of tax evasion and tax revenues on. This study shall set out, a comprehensive analysis of financial crime tax evasionavoidance perpetrated by multinational companies and it will also consider the dark side of professional practice by examining the involvement of professional accountants in facilitating tax avoidance, tax evasion and corruption in nigeria. Pdf tax evasion and avoidance are both phenomena that are probably as old as taxation itself. An analysis of tax evasion in romania at the present time from the economic, social and political point of view with proposals for improving the fight against tax evasion. Thus, companies can shop around for a favourable tax regime in order to avoid taxes. However, tax evasion and tax avoidance are important factors to be considered as they affect both the volume and nature of government finances which is the key to economic development. If the cost of evasion and avoidance depends on other aspects of behavior, the choice of consumption basket and avoidance become intertwined. Effect of tax avoidance and tax evasion on personal income tax administration in nigeria. 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. The impact of tax revenue on nigerian economy case of federal board of inland revenue matthew a. Jun 16, 2017 it is the view of many people that the loss of revenue caused by widespread tax evasion and tax avoidance in nigeria is due to inefficient and inept tax administration. Your notice of assessment australian taxation office.
Apart from salaried employees, most citizens in nigeria pay inadequate taxes or no taxes at all and this has led to a substantial loss of government revenue. Fbr federal board of revenue government of pakistan. Pdf effect of tax avoidance and tax evasion on personal income. Thus, this article examines the behaviour of taxpayers towards tax evasion and tax avoidance in nigeria. Nov 28, 2016 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. Difference between tax avoidance and tax evasion with. Tax avoidance takes place when a tax payer makes use of the available loopholes and ambiguities in the tax system to lower his tax burden, but does not violate. While some had blamed the situation on tax authorities for not living up to expectation. Adebisi jf, gbegi do 20 effect of tax avoidance and tax evasion on personal income tax administration in nigeria. Stockingtease, pages hunsyellow, kmart, msn, microsoft. This study is about the impact of tax evasion on revenue collection performance in tanzania.
Jun 08, 2017 a tax evasion and tax avoidance by the public b poor system of tax collection c inability of the government to prosecute tax avoidance. American journal of humanities and social sciences 1. The most common cause of tax evasion is not wanting to or can afford paying taxes. Find tables, articles and data that describe and measure elements of the united states tax system. Effect of tax avoidance and tax evasion in personal income tax. However, it is biased as the honest taxpayers are not fools, but they. Welcome to tax stats here you will find a wide range of tables, articles, and data that describe and measure elements of the u. Effect of tax avoidance and tax evasion in personal income. Dec 29, 2016 is the existence of loopholes in the nigerian tax law system an opportunity for tax avoidance.
Tax avoidance generates investment distortion in the form of the purchase of assets exempted from tax or undervalued for tax purposes klabel and nwokah, 2009. Tax avoidance, capital flight and poverty in nigeria. Both tax evasion and some forms of tax avoidance can be viewed as forms of tax noncompliance, as they. Tax evasion and governance challeneges in the nigerian. But lets be clear tax evasion is different than tax avoidance. Causes and effects of tax evasion and avoidance on the. Effects of tax evasion and avoidance tax evasion and tax avoidance has undoubtedly affected adversely the government revenue generation capability and the economy as a whole. A valueadded tax vat is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. It also contains other details that are not part of the assessment, such as the amount of credit you have for tax already paid during the income year. Tax evasion and avoidance remains the greatest problems plaguing tax administration in nigeria. The most important key figures provide you with a compact summary of the topic of u. Information and translations of tax administration in the most comprehensive dictionary definitions resource on the web.
Law and economics of taxation, tax avoidance and tax evasion. Impact of tax evasion and tax avoidance in nigeria economy. In contrast, tax avoidance is the legal use of tax laws to reduce ones tax burden. Data were collected through documentary analysis, questionnaires and interviews. Is there any effect of tax evasion and tax avoidance on the nigeria economy. Tax evasion is the illegal evasion of taxes by dondes, corporations, and trusts. Tax evasion and avoidance have adverse effect on government revenue. Effect of tax avoidance and tax evasion on personal income. The research instrument used in collecting the data was questionnaires and oral interview. In nigeria, the federal and state boards of inland revenue were responsible for overall administration of the tax in the federal and state governments. Kim 2008 believes that tax evasion is illegal and violation of tax laws, whereas tax avoidance is a legal way of decreasing tax burden. Tax evading attitude is argued to have an adverse effect on governments socioeconomic and political programs.
The study of the effects of tax evasion and tax revenues on economic stabilities in oecd countries mohsen mehrara, yazdan gudarzi farahani faculty of economics, university of tehran, kargareshomali, po box 141556445, tehran, iran email address. Akinyomi and okpala 20 appraise the factors influencing tax avoidance and evasion in nigeria and their findings reveal that taxpayers perception of u n f a i r n e s s, l o w t r a n s p a r. Abdulhamid ellawule, lecturer, department of accounting, federal university, gashua, nigeria. Effect of tax evasion on economic development of yobe state. The role of mobility of capital in tax evasion and avoidance. Tax evasion is the illegal activity of intentionally not paying taxes or reporting income. Tax avoidance on the other hand is the legal use of tax laws in order to reduce one. Nigeria loses several billions of dollars in tax revenues every year due to unreformed tax regime s and ineffective tax legislation that have aided tax avoidance and tax evasion by wealthy individuals, and local and multinational corporations mncs. The effects of tax evasion and avoidance on the nigerian economy abstract this research project is a very crucial study on the effects on tax evasion and avoidance on nigeria economy. The federal republic of nigeria, and all the federated units, that is, all the state governments in the country have deployed various measures, which of course, are commendably, for the purpose of making such that, tax evasion and tax avoidance is curtailed, as well as, minimised in nigeria. Omorogiuwa 1981 has opined that ineffective tax administration is the main factor responsible for large scale tax evasion in nigeria. Revenue generation of our country is mostly based on the income derived from tax, which can either be direct tax or indirect tax. This research specially focuses on the causes and remedies of tax evasion and avoidance in nigeria. According to richardson 2008, tax evasion as an intentional, illegal and unacceptable behaviour or activities involving a direct violation of tax law to evade the disbursement of tax.
Prospects and impacts of electronic taxation in a developing economy like nigeria. Akinyomi and okpala 20 examined the factors that are influencing tax evasion and tax avoidance in nigeria. The impact of tax evasion and tax avoidance in nigeria economy chapter one history of development in nigeria their so many form of taxation dating back of the days of our great ground father whose by communities dated themselves through communal labour to prosecute community projects. D abstract it has been noted that tax system in nigeria has come to play a significant role, as a major source of revenue to the states and local government by way of imposing tax on tax payers. Many commentators and analyst blamed the situation on the tax authorities, for not living up to expectation with regards to tax administration. How can tax evasion and tax avoidance by minimized and eliminate in abia state. Tax evasion and tax avoidance, a problem which seems to have defied solution, had been deviled the tax system right from colonial times. Corruption, evasion, avoidance and tax haven indicators are strongly associated with low revenue attila, chambas, and combes, 2008 and indeed, corruption functions like a tax itself. The impact of tax evasion and tax avoidance in nigeria economy with abstract, chapter 15, references and questionnaire. Because of the great role taxes play in the development of the economy this paper will appraise the concept of tax evasion and tax avoidance in nigeria with the help of some decided cases. This research project is a very crucial study on the effects on tax evasion and avoidance on nigeria economy. It examined specific factors for rising tax evasion and establishing mechanism to curb the problem. Gurama z, mansor m, pantamee aa 2015 tax evasion and nigeria tax system. Outside the rank and file of the salaried employees, most citizens in nigeria and cameroon pay inadequate taxes or no taxes at all and behaviours like these have.
185 1218 1529 1130 200 1580 1043 1058 677 970 630 545 1233 1510 1139 325 439 238 406 1597 1507 872 1556 683 479 366 1149 1628 230 500 789 108 165 1189 498 189 130 852