Tax Audit and Tax Revenue: An Empirical Study of Federal Inland Revenue Service

Abstract

This study examined audit tax and tax revenue in Nigeria by means of a causal study design on a population twenty six (26) Federal Inland Revenue Service (FIRS), field offices in south south geographical location of Nigeria. Questionnaire was distributed to three (3) management staff from each of the 26 FIRS field offices in south south Nigeria, given a total of 78 respondents that constitutes the respondents of the study. Data for analysis was collected through primary and secondary sources. Primary data was collected through questionnaire to respondents, while secondary data was collected from FIRS Planning, Research and Statistics Department, Central Bank of Nigeria (CBN) statistical bulletin, articles, magazines and other published studies for the period covering 2007-2019. A total of 78 copies of the questionnaire were produced and distributed, of which 73 copies (93.59%) were successfully retrieved. However, out of the 73 copies that were returned only 67 copies (85.90%) were valid and used for the analysis. The simple linear regression was used for analysis. The results revealed that, tax audit statistically and significantly has effect on petroleum profit tax, company’s income tax and value added tax. The study therefore concludes that, tax audit has positive significant effect on tax revenue in Federal Inland Revenue Service of Nigeria, and recommends that the Federal Inland Revenue Service should encourage, strengthen and give more attention to the tax audit department, focus more on the audit activities of the service. This will deter taxpayer’s against non-compliance and discourage tax evasion