I hope the readership have been properly educated on the role of taxation in the nigerian economy. This book discusses the evolution of taxation in nigeria within the framework of eight broad themes i. The principal law is the companies income tax act cita which imposes cit on profits accruing in, derived from, brought into or received in nigeria. To start, here are two basic facts about taxation in nigeria. Nigeria is governed by a federal system, hence its fiscal operations also adhere to the same principle, a fact which has serious implications on how the tax system is managed. History of taxation in nigeria dates back to even when the name nigeria wasnt coined. Examples of multiple taxes include companies income tax, information. Under current nigerian law, taxation is enforced by the. These entities may be required to register for taxes and file income tax returns in nigeria.
Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the. The institute of chartered accountants of nigeria ican was established by act of parliament no. Project muse a comprehensive tax history of nigeria. These rulers managed to create their own system of taxes. Tax incentives a performance analysis of nigerian tax. Department of commercial law ahmadu bello university, zaria, kaduna, nigeria email. The impact of taxation on revenue generation in nigeria.
Even after some tax policies the tax authority has put in place over the few years such as the e payment scheme, tax identification number. Challenges and prospects, a case study of lagos state board of internal revenue service, largest undergraduate projects repository, research works and materials. Atswa institute of chartered accountants of nigeria. Tax and taxation in nigeria europeanamerican journals. Double taxation relief between the federal republic of. Sometimes the purchaser ends up deducting withholding tax from payment invoice of multiple suppliers but fail to remit it to the relevant tax authority. Table 1 nigerias federal, state and local tax jurisdiction and assignment. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well. Additional chargeable tax payable in certain circumstances. Companies income tax cit petroleum profit taxppt value added tax vat personal income tax pit withholding tax wht educational tax edt stamp duties std capital gains tax cgt. Companies income tax cit petroleum profit tax ppt value added tax vat personal income tax pit withholding tax wht educational tax edt stamp duties std capital gains tax cgt. Pdf nigeria is governed by a federal system, hence its fiscal operations also adhere to. Mar 27, 2016 the impact of taxation on nigeria economy growth. A valueadded tax vat, known in some countries as a goods and services tax gst, is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destinationbased tax, where the tax rate is based on the location of the customer.
All taxes in nigeria are collected by nigeria s federal inland revenue service firs. The impact of tax reform on federal revenue generation in nigeria dickson. The most important source of government revenue is tax. The tax revenue collection in nigeria faces some formidable problems which includes the high tax rates and complex filing procedures, multiple taxation and lack of proper enlightenment, lack of statistical data, poor tax administration, and inability to prioritize tax effort, multiplicity of taxes and increase in underground economy. According to firs there are nine9 types of taxes in nigeria. Taxation in nigeria understanding nigerian tax system. Bitrus baba introduction whether it seems timely or a little too late, nigeria seems to be keen on measures to make the rich pay more and therefore address redistribution of wealth through taxation of luxury items. Situated on the continental west coast, and bordered by benin, niger, chad, and cameroon, nigeria represents a gateway to africa, facilitating trade links with partners across the atlantic ocean and the rest of the world. Department of accounting and finance faculty of management sciences, lagos state university, lagos, nigeria eaddress. Explanatory notes on withholding tax administration in nigeria. Below is a comprehensive analysis of taxation in nigeria and the necessary rules, laws, and clarifications.
Unfortunately, we are far behind on tax law reform in nigeria as the last time any business tax legislation was enacted or. Actionaid nigeria is a member of actionaid global federation. Payasyouearn, companies income tax capital gain tax, sales tax and. A taxpayer may be liable to nigerian taxation, either because he is resident in nigeria or because the source of his income is located in. Only traditional rulers had the authority to collect taxes and use them however they wanted.
Journal of international business research and marketing, p apa. A nonresident company is liable to tax on its income derived from nigeria, that is, income attributable to its nigerian operation. This study examined the impact of e taxation on nigeria s revenue and economic growth. Obviously, everything about the nigerian taxation cannot be covered in this article, so try to click the links provided on certain text to get a wider scope and explanation. The nigerian tax system is lopsided, and dominated by oil revenue. The finance act introduces changes to the companies income tax act, value added tax act, petroleum profits tax act, personal income tax act, capital gains tax act, customs and excise tariff etc. A study of federal capital territory and selected states 23 research centre for management and social studies selected states in nigeria and to identify the use of taxation to promote economic growth and development in fct and in some selected states in nigeria. We maintain a strong relationship of interdependence and mutual accountability within the international federation while ensuring a strong balance between selfrule and sharedrule. There are several literatures by different authors, scholars and researchers on taxation as source of government revenue and its impact on nigeria economy.
Each state has its state internal revenue service that handles tax administration, while federal inland revenue service administers pita in the federal capital territory. Policy will eventually give a new lease of life to, and inspire farreaching reform of, the nigeria tax system in terms of structure, number of taxes. Tackling kanos hidden economy usman sani kofar wambai department of accountancy, school of management studies, kano state polytechnic,kano nigeria email. In this article we will discuss about the principles of taxation. Abstract this is a research work on the impact of taxation on smallscale business in a developing economy. The women who felt oppressed by the introduction of tax took to arms forcing the colonial master to withdraw the policy. Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. It is payable by companies that are registered in nigeria and non resident entities carrying on business in nigeria. A performance analysis of nigerian tax objectives actualization. Besides, the nigerian tax system is expected to federal inland revenue services firs, 2015 encourage economic growth and development, generate stable.
Introduction taxation is a main source of revenue to governments across the world. O university of nigeria, nsukka ou innovation centre agboeze irene e. Nigeria has a number of tax treaties referred to as double taxation agreements with a number of countries, these are designed to ensure that the tax payable in nigeria on the profits of a nigerian company being remitted into the country are reduced by the amount of foreign tax paid abroad and vice versa where an. The rate of tax payable is not a fixed sum, depending on the gross income of the taxable employee, and the tax relief granted to him under personal income tax act pita. Aug 09, 2016 taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. There was no formal tax policy in nigeria until the 1930s. Impact of tax administration on government revenue in a. The purpose was to simplify the process so tax collection in nigeria. Desiring to conclude an agreement or the avoidance of double taxation and the. Learn about the various levies and taxes that are collected by state government.
Understanding withholding tax wht in nigeria therefore, you must know about. Federal government, tax revenue, nigeria, revenue collection, firs. Under current nigerian law, taxation is enforced by. Many of them have covered all its ramifications while some have effectively appraised the problem of tax administration in. This form of tax is reported to be one of the most stable sources of revenue to governments however. The impact of tax revenue on nigerian economy case of federal board of inland revenue matthew a. These will help you run your business legally in accordance with the tax laws and regulations in nigeria. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. This framework referred to as edt, has generated many controversies in the nigerian tax space. Taxation in nigeria following the extent laws is enforced by the 3 tiers of government, that is, federal, state, and local. Taxation, revenue allocation and fiscal federalism core. Avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains the government of the federal republic of nigeria government of the united kingdom of great britain and northern ireland. The relationship between indirect taxation and economic growth has been examined severally by different researchers. To examine the relationship between value added tax and revenue generation in nigeria to establish the effects of value added tax on revenue generation in nigeria 1.
Ahuru department of economics and statisticsfaculty of social sciences, university of benin, benin city abstract the main objective of this paper is to ascertain the impact of tax reforms on tax revenue generation in nigeria. The problem of withholding tax in nigeria is the poor administration that leaves a loop hole in the system. Individuals 2 in the case of an individual, other than an itinerant worker and persons covered under paragraph b or subsection 1 of this section, tax for any year of assessment may. Taxation and fiscal regulations in nigeria nigerian law guru. Taxation and fiscal regulations in nigeria introduction the nigerian tax system has undergone significant changes in recent times.
Personal income tax pit can be described as the income tax payable for any year of assessment upon the chargeable income of. Introduction taxation is machinery or process in which society and communities or group of individuals are contributing into an agreed sum which is important for the resolution, development and administration of the public ogundele, 1999. Nigeria also says it is intensifying measures to collect tax from new revenue streams, such as online transactions. However, given that the laws of the federation of nigeria are compiled in several volumes, the latest comprising of 14 volumes, it follows that a person whose interest traverses more than one tax type at any given time must necessarily consult several volumes simultaneously. To what extent will nigeria benefit from the proposed luxury tax. Taxation in nigeria plus history of taxation in nigeria. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. Ascertainment of assessable tax and of chargeable tax 21. We have also published, for the first time, an article by an academic. Value added tax in nigeria how to calculate vatable. All you need to know a withholding tax is a system of taxation. All nigerians individuals and companies are obliged to pay a certain percent of their profit. This edition of the nigerian tax journal summarizes the decided tax cases and administrative pronouncements by rtas and tax administrators in 2018. Few, ifany have examined this line of research in nigeria.
The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. Withholding tax in nigeria administration and rates. During this time, the tax administrators then were the traditional chiefs tax agents. Nigeria s finance bill 2019 key changes and implications the finance bill, 2019 the bill, presented by president muhammadu buhari alongside the 2020 appropriation bill to a joint session of the national assembly on 8 october 2019, has been passed by both the senate and the house of representatives. Nigeria utilised this budgetary fiscal tool in moderating the tax environment for business. Government, tax administrators, practitioners and academics alike. Personal income tax in one of the types of taxes in nigeria that is levied by the federal government of nigeria what is personal income tax in nigeria. Capital gains tax act 1990 world intellectual property. However, none of them managed to survive long enough to be printed in. Its an easier way for the government to get more people to pay their tax. The bills proposed amendment removes the double taxation caused by edt, thereby encouraging corporate. Yet, tax administration was found to have no insignificant effect on tax payment in nigeria tax system.
At this time, it most farm produce and other primary goods. In nigeria, some of the types of taxation we have include personal income tax. Tomori anivs, rsv, mnim estate surveyor and valuer ceo macos urban management consultant. Corporate tax rate in nigeria is expected to reach 30. The role of taxation in promoting economic growth in nigeria is not fully felt, and optimal tax is not been realized that can engine economic growth primarily because of its poor administration. In the longterm, the nigeria corporate tax rate is projected to trend around 30. The tax base in nigeria since had been on the increase in order to. A tax is a compulsory payment made by individuals and companies to the government on the basis of certain wellestablished rules or criteria such as income earned, property owned, capital gains made or expenditure. This is an automated tax system and it helps to track the tax position of every nigerian that has the tin and those who do not have are compelled to go for theirs in order to make tax tracking very easy. While competitive enough to bolster the countrys appeal to foreign investors and skilled expats, nigeria s tax system is also tasked with the responsibility of providing the government with enough resources to finance the countrys development company tax and petroleum royalties in fact account for the primary source of government revenue. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. Chelliah 1989 observed that an increase in indirect taxation compared to direct taxation reduces economic growth more than direct taxation does. However, apart from the southeastern nigeria, where this happened, the introduction of taxation in other part of the country marks the.
Pdf the objective of this article is to identify the various ways in which electronic tax systems can be protected and sustained in nigeria, and. In conclusion,after a proper explanation of the various taxes paid in nigeria,what the levels of government can ask for,what the taxes collected by government is used for. A withholding tax is the tax required by law to be withheld by a party from each payment made to another contracting party from the income or services rendered. Personal income tax amendment act, 2011 pitam is the principal act for the taxation of employees in nigeria. Department of accountancy university of nigeria nsukka to. Items comments rate s 401 30% small company tax rate s 406 20%.
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