Strategy to close tax gaps created by tax avoidance and tax evasion in Nigeria: an overview (Published)
The increase in the tax avoidance and tax evasion among the taxpayers has become a subject of discourse among the tax authorities and other stakeholders across the globe. Tax evasion and tax avoidance, a problem which seems to have defied solution, had been deviled the tax system right from colonial times. While some had blamed the situation on tax authorities for not living up to expectation with regards to tax administration, others attribute it to the unpatriotic attitude of taxpayer. In view of the above, this paper examines the strategy to close tax gaps created by tax avoidance and tax evasion. Contents analysis research design was adopted by reviewing the available literature in the field of this study. It was discovered that Voluntary Asset and Income Declaration Scheme, effective communication of tax benefits to the taxpayers enhance voluntary compliance with payment of tax by taxpayer. Equitable distribution of amenities without using sentiment ,religion, tribe among other things will also increase tax revenue while ,transparency and accountability, consistent updates to the taxpayer’s registry, equitable distribution of income and use electronic channels for simple transactions were also identified as part of strategies to close the gap created by tax avoidance and tax evasion.
Citation: Olufemi F. Oladejo (2021) Strategy to close tax gaps created by tax avoidance and tax evasion in Nigeria: an overview, European Journal of Accounting, Auditing and Finance Research, Vol.9, No. 7, pp.55-63
Keywords: Nigeria voluntary compliance, Tax Evasion, Taxpayer, Voluntary Asset and Income Declaration Scheme, equitable distribution of income, tax administration, tax avoidance, tax revenue taxpayers’ registry
Nigeria has experienced downward slope in its productivity and economic growth. This affects the macroeconomic environment as it is evident that the country has challenges in fixing their roads, challenging in achieving national plan, high rate of unemployment, low quality education and low standards of living. In all these, studies have implicated low and unsteady revenue generation in the country. This study investigated petroleum profit tax volatility on economic growth in Nigeria, using inflation and exchange rates as moderating variables. This study adopted ex post facto research design. Data were obtained from certified sources; namely, National Bureau of Statistics, Central Bank of Nigeria Statistical Bulletin and Federal Inland Revenue Services for the 1981Q1-2017Q4, amounting to one hundred and eight (108) observations. Data were exposed to the scrutiny of the appropriate regulatory agencies for validity and reliability. Pre-estimation tests were conducted using Pearson correlation and stationarity tests. The post-estimation tests included linearity, Heteroskedasticity, Breusch-Godfrey serial Correlation Lagrangian Multiplier and stability test. Data were analyzed using both descriptive and inferential statistics. Findings revealed that Petroleum profit tax volatility had positive and significant effect on EG in Nigeria (R2 = 0.56, β1 = 0.422, t(107) = 6.927, p<0.05). This study concluded that Petroleum profit tax volatility affects economic growth in Nigeria. It was recommended that government should formulate tax policies that will encourage steady tax revenue. In addition, government should ensure prudent application of tax fund to the development of infrastructure that would translate into economic growth
The Conjuction of Tax Auditing Mechanism with Behavioral and Institutional Parameters of Tax Evasion: The Role of Accounting Rules and Forensic Accounting (Published)
This review study attempts to highlight the impact of various non-economic, mainly behavioural and institutional factors on the level of tax evasion specifying the significance of the accounting rules and the contribution of forensic accounting to the detection and the prevention of financial statements. This analysis takes into account tax auditing parameters in order to determine whether and to what extent they affect taxpayer’s behaviour to tax evade or not. Some useful conclusions are drawn regarding the determining factors of tax evasion pay attention to the role of accounting rules to the manipulation of financial statements. The contribution of forensic accounting against tax fraud emerges increasingly. The considerable increase in the cases of financial and tax fraud due to the weaknesses of the statutory audit to detect fraudulent activities impose the need for forensic accountants to deal with financial accounting and tax rules infringements. These conclusions may be essential and useful for tax policymakers to adopt restrictive measures against tax evasion.
This study was designed to identify the effects of tax evasion on government revenue generation in Oyo State. A structured questionnaire was used to collect data from a sample of one hundred and sixty five (165) respondents who were randomly selected across the state while secondary data were gathered from National Bureau of Statistics (NBS), Office of Budget and Economic Planning, and Internal Revenue Office using data from 2011- 2016. Data collected were analysed using descriptive and inferential statistics tools with the aid of Statistical Package for Social Science SPSS, window 23. The findings showed that, the amount of Internally Generated Revenue (IGR) between 2011 and 2016 did not meet the estimates revenue as it was expected. The results also revealed that, the tax evasion has adverse effect on government revenue generation in Oyo state which typically results in revenue loss. The implications of these results may cause inevitable distraction to the potential performance of government in the public sector; therefore, threatening its competence to finance public expenditure and undermining legitimacy of government due to non compliance to pay tax become significant to substantial budget deficit. We therefore, recommended that, the government should embark on massive public enlightenment campaign and adequate utilization of tax revenues on public goods to discourage tax evasion and reduction in tax rate
EXPLORING THE IMPACT OF RELIGION ETHICS, AGE FACTORS, INCOME LEVEL, PROFESSIONAL, EDUCATIONAL, AND GENDER PERCEPTIONS ON TAX EVASION BEHAVIORS: A COMPREHENSIVE APPROACH (Published)
A current survey is lacking on the impacts of religion ethics, age factor, income level, profession, educational, and gender perceptions on the growth of related issues of tax evasion and the impact on the official economy. This quantitative, non-experimental research was to examine the perceptions of people regarding the activities of tax evasion and consequently, its insinuations on official economies. Tax evasions have been of increasing concern among government officials, policy makers, and social scientists. In the past, discussions were on; size and growth of tax evasion activities, currently, attention is being strained on people’s perceptions towards tax evasion and related issues for several reasons. Unemployment is rising, with the attendant problems of financing public expenditure, there is also a global anxiety about the present economic crisis and social policies. Policy makers and politicians have become increasingly aware of the need to solve problems associated with tax evasion both at the state and the national level. Insinuations from the study are made to encourage economic policy-making and to identify areas in which additional research is particularly warranted.
Every citizen is legally bound to pay tax to the government to enable to meet its expenditures to discharge its obligations regarding defense, education, public health, law and justice, infrastructure etc. In most of the countries, tax revenue is a major source of government income. Taxes also play a very important role in the economic development of a country. Tax evasion is concerned with all unlawful activities which are adopted by the taxpayers in order to escape from the payment of tax. The objective of this study is to probe the determinants (causes) of tax evasion in Pakistan from both tax payers and tax collectors point of view. In order to record the views of both tax payers and tax collectors the author has collected data from 150 respondents through two separate structured questionnaires. The data collected through this method has been analyzed through different statistical techniques such as arithmetic mean, percentages, standard deviation, t-tests, ANOVA etc. The results highlight six main cause of tax collection: unproductive expenditures / misuse of funds, anti-tax culture, corrupt tax administration, multiple & higher tax rates, complex tax system and amnesties and incentives for tax evaders. The author has also made certain recommendations to combat tax evasion problem and submitted suggestions to improve tax collection in order to ensure financial independence of Pakistan.