Federal Inland Revenue Service Research Articles

Effect of Tax Audit and Tax Amnesty on Tax Yield in Southwest, Nigeria

The study aimed at investigating the effect of tax audit and tax amnesty on tax yield in southwest Nigeria. Tax audit and tax amnesty are part of the tax administration programmes which serves as government’s instrument for determining and monitoring tax collection. Residents have a natural urge to reduce their tax obligations by intentionally overstating their expenses and producing fraudulent entries and falsehoods in their accounting records. Without a doubt, this shows a lot about Nigeria’s tax administration. The study was carried out in southwest Nigeria which comprises of Ekiti, Ondo, Osun, Oyo, Ogun and Lagos States. Survey research method was used for the study and 302 staff of the audit and risk departments from the State Board of Internal Revenue (SBIR) and Federal Inland Revenue Service (FIRS) formed the population of the study. Taro Yamane sampling technique was adopted to get the sampling size of 172 respondents. The researcher created a closed-ended questionnaire called Tax Administration and Tax Yield (TATY) to gather relevant data for the study. The study found that tax audit has significantly positive link with tax yield while tax amnesty has a negative and substantial correlational influence on tax yield significant relationship with tax yield. It was recommended that tax audits should be undertaken on a regular basis and tax amnesty should be fairly play down because it may reduce future tax revenue.

Impact of Value Added Tax to Enugu’s Economy

ABSTRACT
 Value-added tax is everywhere; it is in the most of goods and services we purchase. Take for instance; when we go to the salon to get our hair done, when we gas up our car, vat is also included in what we pay. In the Philippines, the value-added tax is a form of sales tax. It is a tax on the consumption levied on the sale, barter exchange, or lease of goods, properties, and services in the Philippines, and on importation of goods into the country, it is an indirect tax that may be shifted or passed into the buyer transferring lease of goods, properties or services. While in Nigeria, VAT is a Federal Government Tax that is administered using the existing machinery of the Federal Inland Revenue Services (FIRS). This study assessed the impact of value-added tax on Enugu Nigeria’s Economy, specifically to Government, Business Organizations, and Consumers, the problems identified, significant relationships, and the solutions recommended. The findings revealed that VAT has a significant impact on business organizations and consumers but positively on the part of the government. Recommendation for the improvement is for the consumer with low average earnings should be exempted in paying the VAT provided however, criteria must be set to exempt them in VAT.
 Keyword: Social Sciences, Impact, Value added Tax, Revenue, descriptive research design, Philippines

E-tax system effectiveness in reducing tax evasion in Nigeria

This study examined how electronic tax system (E- tax system) reduces tax evasion in Nigeria. The survey sample was drawn from Federal Inland Revenue Service (FIRS) staff and small and medium-scale enterprise taxpayers registered in F.C.T., Abuja, Nigeria. Primary data was derived from a questionnaire administered to a population of 60 officials and employees of the FIRS and taxpayers at a small and medium-scale enterprise registered in F.C.T., Abuja, Nigeria. The secondary data used was extracted from the tax revenue collection report on the FIRS platform for 2000–2019 (20 years). The conclusive research design was used. General linear model and linear regression were used to analyze the data collected. The E-tax system was measured using actual tax revenues and the level of electronic tax services. In contrast, tax evasion was measured using tax compliance and mind-set of taxpayers towards E-tax system. Taxpayers’ attitudes towards E-tax system, actual tax revenue, tax compliance and the level of electronic tax services were used as mediating and control variables; thus, results established a significant relationship, and this relationship is an adverse one. The work shows that an effective electronic tax system will significantly reduce tax evasion. Therefore, the proper implementation of the electronic tax system helps mitigate the problem of tax evasion that causes economic and social detriments in the tax administration system.

Tax Amnesty and Taxation Revenue: Nigeria’s Voluntary Assets and Income Declaration Scheme (Vaids) in Retrospect

This work adopted the ordinary least square (OLS) method to examine Voluntary Asset and Income Declaration Scheme (VAIDS) of the Nigerian government executive order six as a form of tax amnesty and its impact on tax revenue of Value Added Tax (VAT) and Personal Income Tax (PIT) in retrospect. The data of this study were obtained mainly from secondary sources from Federal Inland Revenue Service reports and Central Bank of Nigeria (CBN) statistical bulletin. Econometric models/packages were used in this work. The result of the findings reveal that Voluntary Assets and Income Declaration Scheme (VAIDS) had a significant impact on VAT while Voluntary Assets and Income Declaration Scheme (VAIDS) did not have any significant impact on personal income tax. This work recommends that the Voluntary Assets and Income Declaration Scheme should be modified to be a permanent programme as a separate body or a Department Federal Inland Revenue Service should be set up to inspect and ensure the smooth running of the programme and the regulatory bodies should ensure that it implement policies that will reduce the loop holes in tax laws which tax payers capitalized on to evade tax. Keywords: VAIDS, Tax, VAT, PIT, FIRS DOI: 10.7176/RJFA/12-16-08 Publication date: August 31 st 2021

Comparative Analysis of the Effect of Direct and Indirect Taxation Revenue on Economic Growth of Nigeria

The study was conducted to comparatively analyse the effects of direct and indirect taxation revenue on economic growth of Nigeria. This was necessitated by the revenue shortfall from Crude oil sales which has been the main revenue earner of the government and the latent potentials of taxation as the most reliable source of revenue. The study was designed to find out which of the tax category affect economic growth most in Nigeria. Ex post facto research design was the research design involving secondary data extracted from the Central Bank of Nigeria (CBN) and Federal Inland Revenue Service (FIRS) published reports. Data were analyzed using descriptive and inferential statically techniques using correlational and regressional statistics. Results reveal that direct taxation has more negative effect on the economy than indirect taxation as evidenced by the adjusted R2 (Direct taxes 80%; Indirect taxes 67%, case wise predictive residuals (maximum values: direct taxes 6.123, indirect taxes 5.893). It was therefore recommended that the government should review regulatory and operational guidelines at the oil and gas sector and tax reforms in the form of reliefs and other incentives to companies to encourage investors and boost productive activities to enhance economic growth of the country.

CONNECTING COMPETENCY IN INTERNAL AUDIT WITH TAX ADMINISTRATION PERFORMANCE: A CASE STUDY OF THE NIGERIAN TAX AUTHORITY

The aim of this study is to identify and analyse internal audit competency requirement for effective auditing performance in tax administration. To achieve this, a case study methodology was employed to carry out a face-to-face interview with 9 internal auditors of the Federal Inland Revenue Service (FIRS) Nigeria. The collected data was analysed using Nvivo qualitative software. The findings of the study show that qualification, knowledge and skills are the three major indicators of internal auditors’ competency in performing effective auditing functions in tax administration. This study implies that to achieve a successful performance of internal auditing in the FIRS, competent internal audit staffs are highly needed for effective internal auditing performance.

Direct Taxes and Income Redistribution in Nigeria

Introduction - Income redistribution is central to the development of any nation. However, the issue of generating income and its redistribution in Nigeria has been challenging overtime, with the nation depending largely on oil with little consideration on other sources of income. Also, insufficient tax resources, tax collectors' illicit activities and a lack of awareness of the value of paying tax by taxpayers are some of the problems facing the country in terms of tax revenue generation. Objective - Our study therefore investigated the impact of direct taxes on income redistribution in the context of Nigeria, using company income tax, personal income tax, petroleum profit tax and education tax as direct tax variables. Methodology/Technique - The study covered the period 1990 to 2019 using annualized data set from Federal Inland Revenue Service (FIRS) and Central Bank of Nigeria Statistical Bulletin. The study employed the Fully Modified Least Squares (FMOLS) to analyze the data. Research Findings - Empirical results of our study revealed that, company income tax and education tax had insignificant negative effects on income redistribution, while personal income tax and petroleum profit tax had significant positive effects on income redistribution, thus reducing income inequality in the context of Nigeria. Recommendations - We thus recommended "inter alia" that, revenue generated from taxes should be effectively used by government in providing quality infrastructures like schools, railway, healthcare facilities and other business outfits across various states for the general wellbeing of the citizens as this is hoped to close the income distribution gap between the rich and the less privileged in the country. Type of Paper - Empirical. Keywords: Income redistribution; direct taxes; government expenditure on infrastructural goods; Fully Modified Least Squares (FMOLS), Nigeria; Income Inequality. JEL Classification: E21; E42; E62; O23 URI: http://gatrenterprise.com/GATRJournals/GJBSSR/vol9.2_8.html DOI: https://doi.org/10.35609/gjbssr.2021.9.2(8) Pages 182 – 196

The Reliance on Lifestyle Audits for Public Officials to Curb Corruption and Tax Evasion in Nigeria

Widespread corruption in the Nigerian public service is having a far-reaching detrimental effect on the economy. Public officers and other policy makers that formulate socio-economic policies are the main perpetrators of corruption in Nigeria. This article focusses on the viability of lifestyle audits for public officials as a strategy for combating such corruption, the proceeds of which are usually laundered and warehoused either offshore or in Nigeria with the assistance of professionals such as bankers and lawyers. If such warehoused wealth is discovered it is usually forfeited to the treasury of the government of Nigeria, after the trial of the offenders. This article interrogates the adequacy of the relevant legislation and the efficacy of the statutory bodies responsible for lifestyle audits in Nigeria, such as the Code of Conduct Bureau, which is discussed, as are the Code of Conduct Bureau and Tribunal Act, 2010, the Economic and Financial Crimes Commission Act, 2004, and the income tax reporting framework administered by the Federal Inland Revenue Service. It appears that the provisions relating to lifestyle audits under the Nigerian statutes are not robust enough to curb corruption and tax evasion. In addition, the enforcement of such lifestyle audits is hindered by the immunity granted to certain Nigerian public officers and jurisdictional conflicts in prosecuting corruption cases.

ACCOUNTING INFORMATION QUALITY AND FIRM PERFORMANCE OF QUOTED OIL AND GAS COMPANIES IN NIGERIA

The aim of this study is to empirically analyze the relationship between accounting information quality and firm performance of oil and gas companies in Nigeria. Time series data on different types of accounting information quality and earnings per share from 2009-2018 were collected from central bank of Nigeria statistical bulletin, annual central bank of Nigeria reports, National Bureau of statistic and Federal Inland Revenue Service. Ordinary Least Square regression analysis, Autoregressive Distribution Lag, Co-integration, Augmented Dickey-Fuller Unit root test, Serial Correlation and Heteroskedasticity test and Error Correction model with the aid of E-view version 10. The empirical results indicate that accounting information quality significantly relate to firm performance; explaining abut 83.1% of total variation in earnings per share, audit lag and disclosure quality were each found to significantly relate to earnings per share. We therefore conclude that accounting information quality ahs the potency to make significant contribution to earnings per share and recommends that increased scrutiny by regulators (FRCN, CBN, SEC etc) over accounting flexibilities would help to curtail accounting discretions both deliberate and systematic so that accounting information in financial statements will faithfully represent the phenomena they purport to represent and future corporate scandals on oil and gas crises can be avoided.

Electronic Corporate Tax, Aggregate Federally Collected Tax Revenues and Economic Growth: A Multivariate VAR Approach

There is the dearth of empirical evidence on the relationship between corporate tax, aggregate federally collected tax revenues and economic growth, predominantly in the post-electronic tax era. This study seeks to assess whether corporate taxes affects aggregate federally collected tax revenues and economic growth using quarterly time-series data as extracted from the official websites of the Federal Inland Revenue Service, National Bureau of Statistics (NBS) and Central Bank of Nigeria (CBN) Statistical Bulletin covering during the period 2015q1-2020q1. The Multivariate Vector Auto Regression result revealed that corporate taxes positively and significantly affect aggregate federally collected tax revenue; company income tax (CIT) and economic growth (RGDP) were statistically significant while petroleum profit tax (PPT) is statistically insignificant to economic growth (RGDP). In view of this result, it is recommended that the Nigerian government should diversify measures aimed at jettisoning leakages in the administration of corporate tax, particularly petroleum profit and company income taxes since they contribute significantly to the revenue base of the country. Moreover, more measures that are stringent should be put in place to revitalize and fully automate the tax systems for improved revenue generation. The study is limited to the post-electronic tax system payment in Nigeria which was occasioned by tremendous improvements in the tax administration system in the Country.

The Effect of Revenue from Taxation on Gross Domestic Product and Human Development Index in Nigeria

Aims: This study investigates the effect of revenue from taxation on gross domestic product and human development index in Nigeria. Secondary data is used from the Central Bank of Nigeria, the World Bank, and Federal Inland Revenue Service for this study.
 Study Design: The Ex-post facto research design was used for the study.
 Methodology: The study used secondary data and was conducted via the relevant econometric tests.
 Result: The study reveals that revenues from taxation have effects on gross domestic product and human development index. Based on the result, the study concluded that taxation is an essential component of fiscal policy that the Nigerian government can use to stimulate economic development. Based on the conclusion, the study made the following recommendations amongst others that, government need to improve on the personal income tax collection process to enable more individuals disclose their income for tax assessment. This is because most self employed (skilled workers such as carpenters, bricklayers, welders, etc) Nigerians don’t pay income tax voluntarily. There should be an improvement in the value added tax administration in Nigeria to reduce the lack of accountability of VAT by the agents. The tax officials and other agents of the relevant tax authorities need to reduce their fraudulent activities with tax payers to increase the amount of tax collected for the economic growth of Nigeria.

ELECTRONIC PAYMENT AND QUOTED FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Electronic -payment is increasingly becoming a daring means of payments in today’s business world. This is due to its efficiency convenience and timeliness. The aim of this study is to empirically analyze the relationship between electronic payment and quoted financial performance of deposit money banks in Nigeria. Data on different types of electronic payment and return on equity from 2007-2018 were collected from the central bank of Nigeria Statistical bulletin, annual Central Bank of Nigeria reports, Federal Inland Revenue Service, financial annual reports and e-business units report of the quoted deposit money banks. The ordinary lest square, Auto-Regressive Distributed Lag, Unit Root Test, Panel Cointegration, Granger Causality Test and Panel Dynamic, Error Correction Model was used in analyzing the data with the aid of E-view version 10. The empirical results indicate that electronic payment significantly relate to return on equity; explaining about 85.3% of the total variation in return on equity, web pay and mobile pay were each found to significantly relate to quoted financial performance, sustaining long run equilibrium relationship with return on equity. We therefore conclude that e-payment has the potency to make significant contribution to quoted banks financial performance and recommends that Central Bank of Nigeria should provide adequate regulatory framework that will ensure customer protection and security of their transactions from cyber-crimes and hackers. The use of established information system models in technology related researches so that the needed factors to be examined would be properly investigated and addressed.

ELECTRONIC PAYMENT PRODUCT AND QUOTED DEPOSIT MONEY BANKS PERFORMANCE IN NIGERIA

Efficient payment systems are crucial for developed and less developing countries economic development and are regarded as the backbone to a highly competitive country. Innovations in the payment industry have also lead to greater access to formal financial system. This study examined the relationship between electronic payment product and quoted deposit money banks performance in Nigeria. data on different sub-variables of electronic payment product and return on equity from 2007-2018 were collected from Central Bank of Nigeria statistical bulletin, annual Central Bank of Nigeria reports, federal Inland Revenue Service, annual reports and e-business unit report of deposit money banks. Ordinary Least Square of multivariate regression based on Auto-regressive distributed Lag, unit root test, panel co-integration, granger causality and panel dynamic error correction model was used in analyzing the data. The empirical results indicate that electronic payment product significantly relate to return on equity. We conclude that electronic payment product has the potency to make positive and significant contribution to performance and recommends that Automated Teller Machine (ATM) should be put in different locations for easily accessible by customers, so that quick service and convenience is maintained hence improving bank operations to the same time constant service should be ensured in order to provide reliability of the services. Deposit money banks and other specialized organizations should conduct awareness programs for client son the importance and ease of using electronic payment products in financial transactions in local and international markets. Banks should pay attention to issuing new and modern electronic payment methods to attract new customers and fellow developments in global markets.

HUMAN RESOURCE COSTS AND FINANCIAL PERFORMANCE OF QUOTED COMPANIES IN NIGERIA

Accounting from the very beginning is confined to record only those business transactions which can be expressed in monetary terms. This study seeks to empirically investigate the relationship between human resource costs and financial performance of quoted companies in Nigeria. Panel data on different types of human resource costs and financial performance spanning from 2016-2017 were collected from financial reports and accounts of quoted companies on Nigeria stock exchange and federal Inland Revenue Service. Ordinary Least Square Multiple Regression, Auto Regressive Lag. Augmented Dickey-Fuller, Co-integration test, Granger Causality Test, Error Correction Model was used in analyzing the data with the aid of E-view version 12. The empirical results indicate that human resource cost significantly relate to financial performance, explaining about 80.1% of the total variation in revenue, human resource accounting were found to significantly relate to financial performance. The study conclude that human resource cost relate positively and significantly to financial performance and recommends that Management should not recruit more staff and should consider retaining only efficient staff, this implies that insurance firms should downsize their number of staff and focus on training and re-training of the most efficient members of staff. Management should make retirement benefits attractive so as to attract best brains to their respective firms, and there should be a well-coordinated program for staff development if the firm’s profitability and performance are desired to increase positively.

Influence of technology adoption on tax audit in Osun state, Nigeria

This study examined the influence of technology adoption on tax audit in Osun State. This workused the Survey research design, and the source of data was primary which was generated by the administrationof well-structured questionnaire which was ranked with five-point Likert scale, 100 copies ofquestionnaire were randomly distributed amongst staffer of Federal Inland revenue service, Osun state,Osun State internal revenue service and some business owners out of which 75 were filled and returned.Ordinary least square method of regression analysis was used to analyse the data collected. Findingsfrom this analysis showed that the coefficient of determination indicated that technology explains 50%of the total variation in tax compliance while it explains 69% of the total variation in revenue increase.It was established that there was positive relationship between adoption of technology and tax complianceand revenue increase in Osun state. Pearson Correlation matrix shows the direction, significantand strength of the bivariate associations amongst the variables in the study. The study recommendedthat the Government should invest heavily on technology for the purpose revenue increase, Governmentshould review tax law to reduce tax evasion to barest minimum, and that the tax authority shouldendeavor to be completing every tax audit at record time. Key words: technology, tax audit, tax administration, tax evasion, tax avoidance.

EFFECT OF TAX REVENUE ON ECONOMIC DEVELOPMENT: EVIDENCE FROM NIGERIA

The main objective of this study is to ascertain the effect of Tax Revenue on Economic Development with a focus on Nigeria. The specific objectives were to determine; the effect of Companies’ Income Tax on Per Capita Income, Petroleum Profit Tax on Per Capita Incomeof Nigeria from 2000-2019. This study employed the use of time series data and Ex-post facto research design was adopted. Secondary data were sourced from Central Bank of Nigeria (CBN), Statistical Bulletin, Federal Inland Revenue Service (FIRS), World Bank Statistical Bulletin and Annual Abstract of Statistics from the National Bureau of Statistics (NBS). Inferential statistics of the hypotheses were carried out with the aid of E-views 10 statistical software using Ordinary Least Square (OLS) regression analysis, Granger Causality test. The study found that companies’ income tax has a significant positive effect on per capita income of Nigeria; petroleum profit tax has a significant positive effect on per capita income of Nigeria; It was recommended inter alia that federal government of Nigeria should underpin public financial management reforms, strengthen supervisory and transparency practices, improve tax administration, and fight tax evasion.

The Federal High Court (Federal Inland Revenue Service) Practice Directions, 2021: An Appraisal

The Federal High Court (Federal Inland Revenue Service) Practice Directions, 2021: An Appraisal

Tax revenue collection or foreign borrowing: what fiscal tools enhance the educational development in Nigeria?

Nigeria’s educational system does not receive sufficient finances and nearly every new administration proposes greater levels of borrowing on the belief that they would enhance the economy, particularly human capital. The most important fiscal tools utilized in the Nigerian political arena to support education are tax revenue collection, foreign borrowing, and its interest component. This study aims to examine the impact of these fiscal tools on educational development in Nigeria. We use the multiple regression analysis of the data obtained from the Central Bank of Nigeria, Federal Inland Revenue Service, and World Bank Economic Development Indicators. The statistics ranging from 1990 to 2019 were analyzed using the Statistical Package for Social Sciences (SPSS). The correlation data shows that education has a substantial positive association with foreign liabilities and taxation income at the 1% level, but the relationship with debt servicing (interest rate) is negatively significant at the 1% level. Foreign debt, on the other hand, shows a substantial positive association with education and tax income at the 1% level but has an insignificant negative correlation with interest rate. Tax income has a substantial negative association with interest rates, but it also has a positive relationship with education and foreign loans. The findings of this study show that foreign debt and interest rates have had little impact on Nigeria’s educational system. The study result met the a priori expectation that tax revenue should impact positively on the development of education in Nigeria. As a result, the research recommends the prudent use of tax revenues while opposing foreign borrowing for political campaigns.

Taxation and Nigerian Economy: an Empirical Analysis

The study was carried out to investigate the effect of Nigerian taxation system on Nigerian economy. The study anchored on benefit received theory of taxation as it theoretical framework. The study covered a period of 18 years (1999-2017). Time series data extracted from Central Bank of Nigeria Statistical Bulletin and Federal Inland Revenue Service for the various years was used for the study. Ordinary Least Square method of regression was adopted for data analysis. The independent variables are Value Added Tax (VAT), Petroleum Profit Tax (PPT), and Company Income Tax (CIT) while Gross Domestic Product (GDP) is the dependent variable. The regression result revealed that there is a significant positive relationship between the independent variables (PPT, CIT) and Gross Domestic Product. However the relationship between Value Added Tax and Gross Domestic Product is negative. It is recommended that government should provide enabling environment for companies to generate more revenues. Government should also reduce the VAT rate to encourage consumption of certain goods.

Trend Analysis of the Link Between Tax Reveneue, Non-Tax Revenue and Public Expenditure in Nigeria

Objective – The paper is aimed at examining the relationship between government tax revenue, non-tax revenue and government expenditure in Nigeria. Design/methodology – Quantitative research design was employed. Secondary data were collected from Central Bank of Nigeria statistical bulletin, World Bank, World Data Atlas and Federal Inland Revenue Service. The study covers the period of 2010 to 2018. Meanwhile descriptive statistics was used to analyzed the data. Results – The findings of the study discovered that, there is a relationship between government revenue and government expenditure, and the Nigerian government revenue and expenditure is in line with the spend-and-revenue hypothesis. That is government revenue only respond to previous changes in expenditure. Thus, government is expected to generate enough tax revenue to enable it meet government expenses as revenue from oil is decreasing. This signifies that whenever there is high government expenditure, it is required that government must raise higher revenue, and in Nigeria, government expenditure is always higher than the revenue resulting to budget deficit. In addition, tax revenue was found to have been increasing even though at a slower rate. Limitation/Suggestion - The study recommends that Nigerian government should cut down current expenditures on wages, acquisition of goods and services that are unnecessary and increase capital expenditure. Increase in capital expenditures on education, infrastructures and health care will boast the economic activity and which will in turn increases government tax revenue.