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Business , Technology. Download Now Download Download to read offline. Moses Oduh Follow. Civil Servant. Tax system in nigeria — challenges and the way forward. Top 3 Challenges in Tax and Revenue Collection. An Assessment of revenue generation drive of Lagos state government through e Tax incentives-in-nigeria- firs. Does the End Use of Remittance Matter?

A Macro Simulation of the Nigerian Eco Related Books Free with a 30 day trial from Scribd. Related Audiobooks Free with a 30 day trial from Scribd. Elizabeth Howell. Views Total views. Actions Shares. No notes for slide. Journal of Economics and Sustainable Development www. Department of Economics, University of Nigeria, Nsukka. Enugu State. The results indicate that their bases are not stable not persistent and volatile. However, while the bases of the company income tax and personal income tax are more sensitive to cyclical swings current state of the economy over time , that of the value added tax VAT is not.

The policy implications of these findings support the recent government tax policy reform of a shift in focus in the tax system from direct taxation to indirect taxation. With the tax base of VAT being insensitive to the current state of the economy, the revenue therefrom will not drop sharply when the economy slows down. It will also shield the government from budgetary shortfalls as it will likely cushion against sharp declines in aggregate tax revenues.

Introduction Taxation in Nigeria following the extent laws is enforced by the 3 tiers of government, that is, federal, state, and local governments with each having its sphere clearly spelt out in the Taxes and Levies approved list for collection Decree, However, Nigeria runs a largely centralized revenue collection system, with the federal government collecting the major revenue petroleum revenue — profit taxes, royalties, crude oil sales; company income tax, value added tax, customs and excise duties on behalf of the constituent governments.

The Nigerian tax system even though has been employed to achieve various economic objectives at notable periods, has basically been structured as a tool for revenue collection which was the legacy from the pre-independence government based on British tax laws.

Over time however, it has been observed that the Nigerian tax system has inherent problems in its structure. Odusola reports that the Nigerian tax system is concentrated on petroleum and trade taxes while direct and broad-based indirect taxes like the value-added VAT are neglected. Thus, the tax system lacks the potential of diversifying the revenue portfolio for the country as to safeguard against the volatility of crude oil prices and to promote fiscal sustainability and economic viability at lower tiers of government.

An attempt to transform and diversify the existing revenue base led to various tax policy reviews in mid s, and as well as the yearly amendments given in the annual budget. In spite of the various reforms, the tax system still had some set-backs especially in its structure and administration Odusola, while tax revenue was still not significant as the diversification of revenue portfolio was not achieved.

He posits that the observed distribution has -vis wide-ranging implications most especially on fiscal performance and attainment of government policy objectives. With the new national tax policy however, there is an intensified effort to grow internally generated revenue particularly tax revenue thus cushioning against declines in aggregate tax revenues. Reducing or increasing the tax rates in anticipation for higher revenue does not provide much insight.

The revenue response to changes in tax rate or changes in economic fortunes can be more muted than the tax base response, as tax revenues alone will only provide inaccurate gauge of evolving tax bases. Tax bases are the first place to look in terms of underlying factors for tax revenue volatility.

Similarly, showing the distribution of government revenue and how the revenue sources have grown or dwindled over time Taiwo, does not provide much insight either. Accordingly, the changes in revenues from each tax is broken down into base and rate changes.

Undoubtedly, a more variable tax base places considerable challenges for the government because expenditures — financed in large part by tax revenue — are difficult to reduce in the short run. It is on this note that the study tries to evaluate the properties of the relied tax bases to ascertain its stability and reliablility.

Following Edgerton, et al. Section 2 reviews briefly the new National Tax Policy, the rationale for it, and the arguments concerns that trailed its pronouncement. Brief overview of the Nigerian taxes, the revenue structure, and brief literature review are also contained in section 2. Section 3 provides the methodology and the data generating process while section 4 provides the results and analysis of results. Section 5 concludes. To actualize the laudable objectives, part of the tax strategy is a shift of focus in the tax system from direct taxation to indirect taxation through gradually increasing Value- Added Tax to a rate that will not affect aggregate consumption in line with achieving stable non-oil revenue flows and to achieve high compliance in the tax system.

Obviously, the impacts of the new tax system especially the significant increase in the value added tax has economy-wide effects and has generated a lot of debate. While some policy analysts are in favour of the tax system especially the increase in VAT, others are of the opposing view.

Those in support of the new tax system posit that it will have an upward effect on the country's stable revenue base and hence economic growth thus achieving the first two objectives. Second, they argue that since the new tax policy is approved by the federal executive council and may likely be enacted into law soon, the phasing in slowly of the law will likely encourage consumption as households will rush to buy goods and services.

This higher spending by consumers will boost aggregate demand which will help boost increased production and economic activities and thus improve aggregate employment thereby consolidating on the first two objectives. Third, over the longer-run the VAT would encourage saving which is needed if Nigeria is to remain competitive by investing in new technologies and new products.

However, other commentators are concerned that the increase in government revenue may actually not be guaranteed 3. They adjudged the Nigeria's growth projections of 7. With 2. This is predicated on the fact that there was a The government budgeted to collect revenue income of N, m but ended up in collecting N, Use of this Web site signifies your agreement to the terms and conditions.

Special Issues. Contact Us. Change code. American Journal of Management Science and Engineering. Views Downloads. The study examined the issues and challenges inherent in the Nigerian tax system.

The theoretical framework approach was adopted in this study. The Nigerian tax system is designed as a means of income generation. The three tiers of government have the responsibility of tax administration in Nigeria. Nigeria tax system is confronted with many issues and challenges such as multiplicity of taxes, bad administration, non-availability of database, tax touting, complex nature of the Nigerian tax laws, minimum tax, commencement, change of accounting date and cessation, and non-payment of tax refunds.

The way forward includes streamlining collection mechanism, ensuring good, effective and efficient tax administration, introduction of tax technology, tax awareness and communication, simplifying the tax laws and abolishing some, refund of taxes overpaid, independent of tax authorities boards of internal revenue , addressing the issue of corruption among tax officials, strengthening of tax audit, establishing special courts to handle tax issues, and stiffer penalty for tax evasion and other tax offences.

Nigeria, Tax System, Tax Laws. Ekeocha et al Journal of Economics and Sustainable Development, Vol. Technology is influencing our lives and continues to change the way we do things from simple day-to-day activities to complex and less routine tasks. The impact of technology can be felt in every area of our lives such as education, entertainment, communication, commerce including taxation. Information Technology IT is a very crucial component of tax administration reform as it enables tax administrators to better gather and analyze information, to proactively manage workload and resources, to foster a co-operative engagement with taxpayers , and to standardize the treatment of taxpayers and thus facilitate the uniform application of the law USAID leadership in public financial management.

The use of IT to aid tax administration is the initiative that gave birth to the now popular E-tax system today The integration of information technology in tax administration in the form of E-tax known as electronic taxation has proved to be a master tool in combatting the challenges of any tax system as it provides information, education, and support to taxpayers and facilitates compliance and administration.

It basically involves the automation of core tax processes. The E-tax systems are often thought of solely as IT support to taxpayer services.

It should be clear, however, that E-tax systems do more than provide information, education, and assistance to taxpayers due to their unique components such as electronic registration and filling, automatic updates of taxpayer information, etc. It also guarantees a reduced cost of administering taxes. According to the World Bank and PwC Paying Taxes Report , sixty-six economies had fully implemented electronic filing and payment of taxes as of Also, twenty of them adopted the system in the past seven years.