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PROJECT TOPIC AND MATERIAL ON THE_PROBLEMS_AND_PROSPECTS_OF_COMPANY_INCOME_TAX_ADMINISTRATION_IN_NIGERIA
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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.
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.
Fraudulent under-declaration of income and making of incorrect returns by
companies coupled with collusion of officials of FBIR staff with company
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.
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
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
Ho:- 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
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.
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
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
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
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
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.
9. TAX BASE:- This is simply that object on which tax should be imposed
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.