Federal Inland Revenue Service Research Articles

Impact of Tax Revenue on Income Inequality and Poverty in Nigeria

This study is on the impact of tax revenue on income inequality and poverty in Nigeria from 1995 to 2022, variables used are total tax revenue as the independent variable, poverty rate and income inequality proxy by Gini coefficient as dependent variables. Multiple taxation, corruption, value added tax, policy failures and inefficient fiscal operations are identified by this study as contributive factors to income inequality and poverty in Nigeria. The findings revealed that the relationship between total tax revenue and poverty rate is positive (as against apriori expectations). The estimated results are R2 at 0.626243 and adjusted R2 0.588253 which are the coefficient of determination or explainability of the independent variable (TTR) for the dependent variable (GIN), 63% of the changes in the dependent variable (GIN) is caused by changes in (TTR). The study concluded that tax revenue has a significant positive impact on poverty rate and income inequality in Nigeria. Major recommendations are that the Ministry of Finance, the Federal Inland Revenue Service (FIRS) the state board of Internal Revenue Service, the Joint Tax Board (JTB) should improve the dividend of taxation through accountability, transparency, better revenue generation and tax revenue expenditure on infrastructure and basic services.

Effect of Federal Government Tax and Non-Tax Revenue on Economic Growth in Nigeria

The objective of this study was to analyse the influence of tax and non-tax revenue generated by the federal government on the economic growth of Nigeria. The study utilised an ex post facto approach and specifically examined the Nigerian economy as a whole, resulting in a population and sample size of one. Data was collected from secondary sources, including the yearly reports and statistics releases of the CBN and the office of the Federal Inland Revenue Service (FIRS). The study spanned a decade, specifically from 2001 to 2020. The hypotheses were tested using simple linear regression for data analysis. The regression study revealed a substantial influence of federal government tax income on economic growth. The F-statistic yielded a value of 466.0399, the P-Value was determined to be 0.000, and the R-squared value was calculated as 0.962813. These results indicate that about 96.28% of the variability in real GDP can be accounted for by tax revenue. Similarly, the analysis demonstrated a substantial impact of non-tax revenue from the federal government on the growth of the economy. The F-statistic yielded a value of 201.5388, the P-Value was found to be 0.000, and the R-squared value was determined to be 0.918010. These results indicate that about 91.80% of the variance in real GDP can be accounted for by non-tax revenue. Moreover, the economic growth was significantly influenced by the overall revenue of the federal government. The F-statistic yielded a value of 469.5482, indicating a strong statistical significance. The P-value was 0.000, further confirming the significance of the results. The R-squared value was 0.963081, indicating that approximately 96.31% of the fluctuation in real GDP can be accounted for by total tax revenue. These findings emphasise the essential importance of both tax and non-tax revenue, namely from the federal government, in stimulating economic growth. In order to increase revenue generation, it is crucial for the government to give priority to enhancing tax administration and compliance. This can be accomplished by implementing efficient tax regulations, streamlining tax procedures, and establishing strong monitoring and enforcement measures. Furthermore, it is advisable to diversify non-tax revenue streams beyond oil.

Taxes and Health Infrastructural Development in Nigeria

This study investigated the effect of taxes on health infrastructural development in Nigeria. The objectives of the study among others were to determine the effect of company income tax on health infrastructural development in Nigeria, evaluate the effect of petroleum profit tax on health infrastructural development in Nigeria. Four research questions and four hypotheses were formulated as a guide for the study. This study adopted ex post facto research design and secondary data were collected from the National Bureau of Statistics, Federal Inland Revenue Service (FIRS), Central Bank of Nigeria (CBN) and Federal Ministry of Finance. The study was for forty-one (41) years from 1982 to 2022. This study utilized descriptive statistics, unit root test and ordinary least square regression method of data analysis with the aid of E-View 12. The findings of the study were that company income tax is statistically positive and significant on health infrastructural development in Nigeria, customs and excises duties is statistically positive and significant on health infrastructural development in Nigeria, petroleum profit tax is statistically negative and significant on health infrastructural development on health infrastructural development in Nigeria is statistically negative and insignificant, and value added tax is statistically negative and insignificant on health infrastructural development in Nigeria. Hence, study concluded that the federally collected taxes influence health infrastructural development in Nigeria. From 1982 – 2022. Consequently, the study suggested amongst others that, government should intensify efforts at developing the level of health infrastructure in the country through optimal tax revenue mobilization because, the study affirmed that company income tax and customs and excise duties positively and significantly impact on health infrastructural development in Nigeria.

Taxes and Road Infrastructural Development in Nigeria

This study examined the taxes and road infrastructural development in Nigeria. The specific objectives of the study among others were to determine the relationship between of company income tax on road infrastructural development in Nigeria, ascertain the relationship between petroleum profit tax on road infrastructural development in Nigeria. Four research questions and four hypotheses were formulated as a guide for the study. This study adopted ex post facto research design. The population of the study was conducted on Federal Republic of Nigeria under the National Bureau of Statistics, Federal Inland Revenue Services, Central Bank of Nigeria (CBN) and Federal Ministry of Finance. The study period covered was forty-one (41) years spanning from 1982 to 2022. This study utilized Descriptive statistic, Unit Root Test and Ordinary Least Square Regression method with the aid of E-View 12. The findings of the study showed a positive and significant relationship between company income tax on road infrastructure in Nigeria; customs and excises duties positively and significantly affects road infrastructure in Nigeria; petroleum profit tax negatively and insignificantly affects road infrastructure in Nigeria and finally, value added tax negatively and insignificantly influence road infrastructure in Nigeria is statistically negative and insignificant. The study concluded that taxes such as company income tax, custom and excise duties affects road infrastructural development in Nigeria for the period spanning from 1982 – 2022. Therefore, the study suggested amongst other that, government should intensify efforts at developing the level of infrastructure in the country through tax payers’ revenue because, this study affirmed that company income tax and customs and excise duties positively and significantly affects road infrastructure in Nigeria

IMPACT OF MISMANAGEMENT AND EMBEZZLEMENT OF PUBLIC FUNDS ON GOVERNMENT PARASTATALS

This study examines the impact of mismanagement and embezzlement of public funds in government parastatals using Federal Inland Revenue Service (FIRS), Abuja as a case study. The study employs the survey descriptive research design. A total of 85 respondents were selected as the sample size comprising staff of Federal Inland Revenue Service (FIRS), Abuja. Seventy-one (71) responses were validated from the survey. The findings reveal that the nature of mismanagement and embezzlement of the funds in the public sector is prevalent at (β = 0.912, R2 = 0.948, P = .000) and show that there are factors that enhance mismanagement and embezzlement of the fund in the government parastatals at (β = 0.892, R2 = 0.937, P = .000). It is found that mismanagement and embezzlement have a significant effect on the public fund in government parastatals (β = 0.887, R2 = 0.936, P = .000). It is also found that the extent to which financial irregularities and corrupt practices affect public service delivery (β = 0.896, R2 = 0.952, P = .000). Therefore, the study recommends the establishment of a strong penal code system to enforce laws and rules as sternly as the need for adequate punishment for offenders on corruption and related matters on fund embezzlement is paramount and germane.

A Critical Examination of the E-Taxation, Improvement in Tax Compliance and Revenue Collection of Economic Development in Nigeria: An Examination covering 2008 to 2023.

This study looked into the topic of e-taxation and enhanced tax compliance in Nigeria. The study aimed to achieve two particular goals. It investigated the impact of e-taxation on tax evasion in Nigeria, as well as the extent to which e-taxation has contributed to the reduction of tax avoidance in Nigeria. The study's analysis used secondary quantitative data from the Federal Inland Revenue Services (FIRS) and the National Bureau of Statistics (NBS). The study found that e-taxation had a considerable beneficial impact on tax evasion in Nigeria. The study found that the mean value of tax revenue increased after the implementation of e-taxation when compared to the mean value before the adoption of the e-taxation system. It also indicated that e-taxation has greatly helped in curbing the issue of tax evasion in Nigeria. The data analysis revealed a greater mean value for tax revenue following the implementation of e-taxation as compared to the mean value before the e-taxation system. The report provided numerous important recommendations, including the necessity for FIRS to develop an electronic tax payment system mobile App that will raise awareness and simplify the country's e-tax system. This study concluded that the e-taxation system in Nigeria achieves higher tax compliance than the manual approach.

Influence of Strategic Alliance on the Performance of Federal Inland Revenue Service (FIRS)

Strategic alliances are collaborative relationships aimed at achieving mutual strategic objectives in order to achieve organizational performance objectives. Strategic alliances emphasis in literature has been significantly tilted towards private business enterprises and multinational companies. Yet, little is known about how strategic alliances work within governmental bodies like the FIRS. The purpose of this article is to examine the influence of strategic alliances on performance of the Federal Inland Revenue Service (FIRS). The study uses simple percentage count and standard deviation to analyze primary data obtained through questionnaires (google forms) from a sample of selected senior staffs at the Federal Inland Revenue Service South West zone which is made up of thirty (30) FIRS offices having a total of two hundred and seventy nine (279) respondents using purposive sampling method. Also, correlation coefficients, t-test, regression analysis and ANOVA was used to demonstrate significance. Result showed that strategic alliances/collaborations significantly and positively impact FIRS performance (F= 489.672, P0.00) in terms of tax revenue generation, voluntary tax compliance and widening of the tax net. It therefore recommends that techniques and strategic measures should be maintained to enhance the management of all collaborations for sustained performance of FIRS in Nigeria.

Workforce Diversity and Organisational Development: A Study of Federal Inland Revenue, Abakaliki, Ebonyi State, Nigeria

Organizations all over the world are facing many challenges in the management of their workforce. One of the challenges is workforce diversity. Thus, because they are recruiting people from different backgrounds. The paper sought to examine the effects of workforce diversity in the federal inland revenue service Abakaliki. The broad objective of the paper is to examine the effect of workforce diversity in organizational management. The specific objectives are to find out whether workforce diversity brings about industrial harmony or disharmony; to ascertain the effects of managing multicultural organization and to examine the impacts of workforce diversity in the organizational development of federal Inland Revenue Service Abakalliki. Content Analysis was used in the study. This is because the study relies mainly on secondary data. Situational theory propounded by Fieldler, A (1967) was used as the basis upon which the framework of the study is hinged. The paper after analyses found that workforce diversity is an inevitable organizational challenge if organizations are recruiting workforce from diverse environments etc. The study therefore recommended that management should brace up for the challenges of managing multi-cultural organizations among others. The study implies that as many people from different strata of society are employed in organizations, workforce diversity, and conflicts are inevitable. The only panacea for the problems is to develop an organizational culture to is attuned to relativism; the failure of which industrial disputes, chaos, and mutual suspicion are evident. Received: 23 March 2024 / Accepted: 30 April 2024 / Published: 5 May 2024

Income Tax Rate Regimes and Financing Decisions of Quoted Agricultural Companies in Nigeria

The purpose of the study was to examine income tax rate regimes and financing decisions of quoted agricultural companies in Nigeria. The specific objectives were as follows: to ascertain the extent to which company income tax rate regimes influence equity financing decision of the Nigerian quoted agricultural companies, to determine the extent to which company income tax rate regimes influence debt financing decision of the Nigerian quoted agricultural companies, and to investigate the extent to which company income tax rate regimes influence retained earnings financing decision of the Nigerian quoted agricultural companies. The study employed an ex-post facto research design in carrying out the study. Data for this study were gathered from secondary sources of data. The research data were obtained from various secondary sources which include Central Bank of Nigeria Statistical Bulletin, Central Bank of Nigeria Annual reports, Federal Inland Revenue Service (FIRS) revenue statistics as well as other researchers’ journals and publications. The study employed regression models for the purpose of the study. The major findings of this study showed that CIT1 had a positive and insignificant effect on company financing decisions, CIT2 had a negative and insignificant effect on company financing decisions, and CIT3 had a positive and significant effect on company financing decisions. Arising from the results obtained, the study makes the following recommendations: Government should make it possible for companies to evade tax and penalize any registered company that evades tax.

Tax Revenue and Economic Growth in Nigeria: A Bi-Directional Approach

The study examined the bi-directional effect of tax revenue and economic growth in Nigeria from 2011 to 2022 by employing total tax revenue and nominal Gross Domestic Product at current price. Data was extracted from 2011 to 2022 quarterly reports published on the website of the Central Bank of Nigeria, National Bureau of Statistics and Federal Inland Revenue Service. Unit Root test using Augmented Dickey-Fuller (ADF) test shows that at the first difference, the variables are stationary at 1%, 5%, and 10% level of significance while Engle and Granger co-integration test reveals significant evidence of a long-run relationship between the variables of the study’s models. Findings from Error Correction Model (ECM) estimation show that Total Tax Revenue has a positive and significant effect on Nominal Gross Domestic Product (t-stat 4.777; P-value 0.000) and Nominal Gross Domestic Product has a positive and significant effect on Total Tax Revenue (t-stat 5.552; P-value 0.000). The Granger Causality test revealed that there exists a positive and significant bi-directional effect between Total Tax Revenue and Nominal Gross Domestic Product in Nigeria. The study concludes that tax revenue has a positive and significant effect on economic growth and economic growth has a positive and significant effect on tax revenue. The study recommends that the government ensure continuous economic growth by providing human capital, security, employment, and foreign investment. This would increase the standard of living of citizens, increase tax payer’s income, and attract foreign investors who would pay tax on their income and properties.

Taxation and Socio-Economic Development in Nigeria

The study examined the linkage between taxation and socio-economic development in Nigeria. The study employed a descriptive research design using secondary data collected from various issues of the Central Bank of Nigeria, Planning, Research and Statistics Department, National Bureau of Statistics and Federal Inland Revenue Service bulletins. The study focused on a five year time series study from 2017 – 2021. The study was anchored on the socio-political theory of taxation and the study methodology involved the review of extant literature on two groups of taxes: oil and non-oil taxes and how they are used to bring about socio-economic development proxied by GDP expenditure at constant purchase prices. The review revealed that tax revenue had positive relationships with socio-economic development, but they are grossly inadequate to meet up with GDP expenditures. The study concluded that tax revenues are under generated in relation to crude sales. It was recommended that among others that the government should engage in a complete re-organization of tax administrative machinery to reduce poor documentation of tax receipts, incidence of tax evasion and avoidance to the barest minimum to improve tax revenue and bring more taxpayers into the tax radial in order to enhance socio-economic development.

Transfer Pricing Documentation Methods in Nigeria: A Critique of the Prime Plastichem Case Against International Best Practices

The quest to ensure that the tax planning activities of multinational enterprises operating in Nigeria do not erode the country's domestic tax base has led to the enactment and enforcement of the Transfer Pricing (TP) Regulations, 2018 in Nigeria. The TP Regulation provides for a comprehensive framework to ensure that the pricing of related party transactions is consistent with global best practices on TP. The enforcement of the TP Regulation in Nigeria was taken a step further in 2020 when the Tax Appeal Tribunal affirmed the imposition by the Federal Inland Revenue Service (FIRS) of liability of over one billion naira on Prime Plastichem Nigeria Limited for failing to apply consistent TP methods in the financial years 2013 and 2014. While this decision was hailed as Nigeria's first decision of the Tax Appeal Tribunal (TAT) dealing with transfer pricing, the decision has been criticised for failing to apply the global standards for TP documentation. This article seeks to critique the principles of TP documentation espoused in the Prime Plastichem case vis-à-vis international best practices on transfer pricing documentation.

Testing the Causal Nexus Between Tax Revenue and Human Development in Nigeria

We examined the effect of tax revenue on human development in Nigeria in this study. To carry out this study, we use Companies’ income tax, petroleum profit tax, value added tax, and customs and excise duties tax revenue on per capita income for the period 1990 to 2021. Ex-post facto research design was employed for the study. Secondary data from the Central Bank of Nigeria (CBN) statistical bulletin, Federal Inland Revenue Service (FIRS) reports and the World Banks database was used. Several statistical and econometric techniques were applied to analyze the data. Findings from the study revealed that tax revenue in the long and short run had an insignificant effect on human development (proxied with per capita income) in Nigeria. Based on the findings, it was recommended that government should invest tax revenue on the health system in form of providing adequate health infrastructures, provision of relevant and specialized manpower in the health sector, and provide adequate sensitization on healthy lifestyles that would promote increased life expectancy in Nigeria. Lastly, government should invest tax revenue in creating awareness on the benefits of early child enrolments in schools, provide adequate incentives to motivate teachers to deliver on the job and build conducive learning environments that will encourage students to engage in learning.

E-Tax Compliance in Nigeria: Implications for Company Income Tax and Petroleum Profit tax

This work examines the effect of e-tax compliance in Nigeria: Implication on Company Income Tax and Petroleum Profit Tax. As Nigeria's economy continues to evolve in the digital age, the taxation landscape has seen significant changes with the advent of e-tax compliance. This work therefore aims to explore the implications of e-tax compliance on two key revenue streams for the Nigerian government: Company Income Tax (CIT) and Petroleum Profit Tax (PPT). The study reveals that the amount of capital gain tax revenue before (before the arrival of e-taxation) and after (after the advent of e-taxation) shows a positive, negligible difference and that the Petroleum Profit Tax also has a positive negligible difference between pre- (before the advent of e-taxation) and post- (after the advent of e-taxation). The study concluded that the transition to electronic tax compliance in Nigeria has been driven by the need for efficiency, transparency, and improved revenue collection. It has not only streamlined the tax assessment and payment process but has also increased the government's ability to monitor and collect taxes from this lucrative industry. Federal Inland Revenue Services should develop measures to ensure that defaulters are brought to book and dealt with in accordance with the laws, in addition to establishing a collaborative pattern between the government, Federal Inland Revenue Services, and Nigerian taxpayers to enable them to observe any difficulty felt by the taxpayers or the shortcomings besetting the effectiveness of the system.

Application of e-governance in service delivery: A study of Federal Inland Revenue Service

The Federal Inland Revenue Service (FIRS) plays a pivotal role in Nigeria's fiscal landscape, responsible for collecting revenue through various taxes, including income tax, value-added tax (VAT), and corporate tax, among others. Historically, tax administration in Nigeria was marked by inefficiencies, corruption, and a lack of transparency. However, the adoption of egovernance as an important tool used in the delivery of government services to the people by leveraging It is based on this, that this study explores the application of e-governance in the Federal Inland Revenue. The study was a documentary research. Some challenges uncovered by the research include the digital divide, inadequate technology infrastructure, lack of digital literacy, cyber security threats, organizational culture, and lack of enabling legislation were discovered. In conclusion, the application of e-governance in the Federal Inland Revenue Service of Nigeria has revolutionized the nation's tax administration. It has enhanced efficiency, transparency, and revenue collection while improving taxpayer satisfaction. As Nigeria continues its journey toward digital transformation, e-governance in the FIRS stands as a testament to the positive impact of technology on governance. The paper, therefore, recommends that the government should improve internet infrastructure and access and that digital literacy programmes should be promoted to ensure the sustainability and inclusivity of e-governance initiatives .

IMPACT OF TAX STRUCTURE ON ECONOMIC GROWTH IN NIGERIA

This study examined the relationship among tax structure, poverty and economic growth in Nigeria. Specifically, this study investigated the impact of tax structure on economic growth in Nigeria. Secondary data sourced from Central Bank of Nigeria Statistical Bulletin, Federal Inland Revenue Services and WDI were used. The main explanatory variables are the tax structure variables which include personal income tax (PIT), value added tax (VAT), company income tax (CIT) and petroleum profit tax (PPT), while the dependent variable is economic growth. Augmented Dickey Fuller (ADF), Phillips-Perron (PP) and Autoregressive Distributed Lagged (ARDL) Bound tests, and Error Correction Model (ECM) techniques were adopted. The results revealed that personal income tax and value added tax have significant negative effects on economic growth, but company income tax and petroleum profit tax have significant positive effect on economic growth. Also, the lagged value of personal income tax has a significant effect on economic growth. In same manner, the lagged value of value added tax has significant negative effect on economic growth. Therefore, the study concluded that tax structure significantly impacts on poverty and economic growth in Nigeria.

The Effect of Green Taxation on Financial Performance of Selected Oil and Gas Firms in Nigeria.

This study investigated the effect of green taxation on financial performance of selected oil and gas firms in Nigeria for the period 2017-2022. The specific objectives were to investigate the effect of carbon emission taxes; to find out the effect of petroleum profit tax; and to investigate the effect of industrial pollution tax on financial performance of selected oil and gas firms in Nigeria for the period 2017-2022. The model included the total assets of the oil and gas firms as dependent variable. The study adopted ex post facto research and employed times series data sourced from the annual financial records of the oil and gas firms, and the Federal Inland Revenue Service (FIRS). Evidence of longrun relationship was found among the model variables through the Johansen test, and a fast speed of adjustment at 32.01% annually. The major findings of the study are: carbon emission taxes had significant negative effect on financial performance of oil and gas firms in Nigeria; petroleum profit tax has significant negative effect on financial performance of oil and gas firms in Nigeria; and industrial pollution tax has significant negative effect on financial performance of oil and gas firms in Nigeria. Based on the findings, the study concluded that green taxation had significant negative effect on the financial performance of oil and gas firms in Nigeria. The study recommended that: the policymakers should design a strategy toward reviewing the carbon emission taxes due to evidence of negative shock on the oil and gas firms; the petroleum profit tax should also be reviewed down in order to mitigate risks arising from their operation which affect their performance; the government should further increase the industrial pollution tax rate, this will deter industries from indiscriminate pollution of the environment, restore investor confident and stabilize stock market in Nigeria.

A CRITICAL EVALUATION OF STAMP DUTY AS A CATALYST FOR ECONOMIC DEVELOPMENT IN NIGERIA: A PRAGMATIC APPROACH

The primary objective of this study is to examine the effective and efficient assessment and collection of stamp duty tax in Nigeria. Stamp duty tax is a tax imposed on both written and electronic instrument such as conveyance on sale, admission, bill of exchange, bill of lading, receipt, apprenticeship, charter party, hire purchase, contract note, promisory note, marketable securities etc. Recently, the Finance Act 2020 expanded the scope of stamp duty to include Electronic Money Transfer Levy (EMTL) for every bank deposit up to the tune of N10,000 and above for N50 charge (one off). The mode of assessment of stamp duty is either a fixed flat rate or alvalorem basis on the instrument. The relevant tax authority for the assessment and collection of stamp duty tax in Nigeria are the Federal Inland Revenue Service (FIRS) and State Internal Revenue Service (IRS). The inherent challenges of stamp duty are the acceptance of fake stamp duty instrument without verification and lack of awareness by taxpayers among others. The recommendation is continuous enlightenment of taxpayers on the existence and inport of stamp duty tax as well as the review and simplification of the stamp duty Act 2004 to reflect current economic realities.

Effects of the Implementation of the Employees’ Compensation Act in Federal Inland Revenue Service (FIRS) Abuja, Nigeria

This study examines the effect of implementing the Employees' Compensation Act in the Federal Inland Revenue Service (FIRS) located in Abuja, Nigeria. The study assesses how the implementation of this Act affects the well-being of workers within the FIRS in Abuja. A total of 399 employees from the FIRS in Abuja participated in the survey. The findings of the study indicate that the respondents lack awareness regarding the compensation act within the FIRS. Additionally, the majority of the respondents expressed disagreement with the adequacy of compensation for FIRS employees who experience work-related disabilities. On the other hand, most respondents agreed that employees suffering from work-related mental stress are adequately compensated within the FIRS. One of the recommendations put forth is for the FIRS to establish effective communication strategies to ensure that all employees have a clear understanding of their rights and the compensation provisions available to them in cases of work-related disabilities. Achieving this objective could involve organizing regular workshops, training sessions, and informative campaigns.

Digitalization, Culture, and Taxpayers’ Compliance in Nigeria

This study investigated digitalization, culture, and taxpayers' compliance in Nigeria as the literature shows a paucity of studies on the subject. The study was guided by the economic deterrence theory and benefits theory of taxation (BRTT). Descriptive survey research was adopted. The study population comprised of selected staff at the Federal Inland Revenue Service (FIRS) offices, in Ibadan. three hundred and eighty-four (384) respondents were drawn using the Taro Yamane formula. A selfconstructed questionnaire was administered to the respondents (r=0.821). Data collected were analyzed using descriptive and inferential statistics. Results showed that tax digitization (x=2.98), tax culture (x=2.93), and tax compliance (x=3.05) are good. Results also showed a significant influence of tax digitalization and tax culture on taxpayers’ compliance (F=22.551, p < 0.05). Tax digitization (Beta = .095; t = 1.798) has a positive influence on taxpayer's compliance, while tax culture (Beta = -0.344; t = -6.546), has a negative influence on taxpayer's compliance. The study recommend that the government should consider adopting a tax policy that would facilitate tax digitalization, tax education, sensitization to promote tax culture, and the inclusion of e-transactions taxation in the tax laws.