The administration of tax is very important to any government as it is the. In the case of employment, a nonresident person is liable to tax in nigeria if the duties of employment are wholly or partly performed in nigeria, unless. Basic principles of taxation in nigeria tax nigeria mondaq. They note that modern tax structure development has generally been characterized by a shift from excise, customs, and property taxes to corporate income and progressive i internal revenue service 1996. While the federal government is responsible for the administration of the tax. 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. Income tax administration in nigeria myschooltrick. Musgrave 1969, have also stressed the importance of tax administration issues. Real estate investment companies approved by the securities exchange commission to operate as a real estate investment scheme in nigeria will be exempt from income tax on rental income and dividend income earned in a financial year will be exempt from income tax provided that at least 75% of such income are distributed within 12 months. Nigerian tax rates vary according to the amount of income you earn, and you pay different rates on different portions of your income. Specifically, local governments collect taxes on personal, social and commercial permit fees.
Property tax is generally a tax imposed by municipalities upon owners of real property within their jurisdiction based on the value of such property. Relevant tax authority may assess and charge tax on the turnover of a business, etc. Tax system the nigeria tax system is made up of tax law, tax policy and tax administration. The tax system in nigeria is made up of tax policy and tax laws, stratified into tax assessment. Tax system in nigeria the tax system in nigeria is made up of the tax policy, the tax laws and the tax administration. Pdf an assessment of the prospects of property tax. Value added tax vat in nigeria is levied on all products and services traded within the country and payable to government at a 5% rate, one of the lowest in the world. In the light of this reality and the general realisation that it would be foolhardy if nigeria continues to solely depend on oil revenues whilst neglecting other nonoil sources, adapting the tax administrative. Jun 14, 2017 value added tax administration in nigeria value added tax vat was introduced by the federal government of nigeria and is provided for by the value added tax decree 102 of 1993 which became effective in 1994 which requires manufacturers, wholesalers, importers and suppliers of vatable goods and services to be registered within six months of. The impact of tax administration on revenue generation in gombe state, nigeria. Explanatory notes on withholding tax administration in nigeria.
The publication is produced jointly by the african tax administration forum. Tax compliance barriers and internally generated revenue in. Tax reform and administration in nigeria taxation project topics. All of these are expected to work together in order to achieve the economic goal of the nation. Abiola and asiweh12 stated that the three component of tax system are expected to work together in order to achieved the. Nigerias tax collection performance is very poor at the moment. Taxation patterns throughout history are largely explained by administrative consideration. This study a nalyses the impact of non oil tax revenue on economic growth from 1993 to 2012 in nigeria. The the study employed secondary data and was based on the ability to pay theory of taxation. Pre 2002 tax reform efforts the federal government had taken farreaching steps aimed at reforming the nations tax system before the pre 2002 reform efforts.
Current tax situation in nigeria according to the nigerian laws, there are three legal bodies that can levy the taxes on nigerians. Government, tax administrators, practitioners and academics alike. Home topics accounting project pdf appraisal of value. Tax identification number tin in nigeria, every citizen of nigeria working with the government, the private sector or owns. Taxation being a wide subject time and resources are bound to constitute a bottleneck for its coverage. Methods of income tax would provide means of making amendment where necessary for efficiency and effectiveness in the country. The nigerian tax system has not been able to perform the expected role of revenue generation. Pdf the impact of tax administration on revenue generation in. The nigerian tax system has been taken through several reforms and modifications. The purpose is to further enhance the process of tax collection and administration in nigeria. Countries seeking to improve its revenue generation would opt for a concept enabling it to best realize its objective with due regards to its peculiar socioeconomic makeup, one of the way is by taxation. This form of tax is reported to be one of the most stable sources of revenue to governments however.
The pkf worldwide tax guide 20 wwtg is an annual publication that provides an overview of the taxation and business regulation regimes of the worlds most significant trading countries. K reddy, and debela yadeta wollega university, school of graduate studies, department of accounting and finance, p. Tax administration in nigeria is vested in the three tiers of government. Where a person rents or hires propertyservices from another, withholding tax at the rate of 10% will apply. Oct 06, 2017 tax system in nigeria has undergone various policy changes geared at a more effective and efficient way of tax collection and administration. Tax policy, tax legislation and tax administration. Tax credit allowable against tax payable on income derived from outside nigeria.
The sale of real estate properties is subject to a 10% tax on the gains. According to the presidential committee on national tax policy 2008, the central objective of the nigerian tax system is to contribute to the. The study examines the administration of companies income tax in nigeria. Not all nairas earned are equal as far as the taxman is concerned. Nigerias firs provides updates on tax administration in nigeria. Tax administration in nigeria should be efficient and costeffective in line with international best implementation committee to monitor practices. The taxation of foreign aid overseas development institute. 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. Nigerians under the law are to pay 25% of their total worldwide income while foreign individuals are to pay 25% of the profit made in nigeria only. It is regulated by the vat act and the vat amended act. The recent reforms include the introduction of tin. The nigeria tax system, like any tax system, is a tripartite structure which comprises of.
The latest representations of these tax laws are the personal income tax act 2004 and the companies income tax act 2004. The oil is an exhaustible and dwindling resource, while taxation is. The ntp is a deliberate effort towards entrenching a robust and efficient tax system. Babatunde fowler delivered, on 6 september 2018, a keynote address at a stakeholders meeting on tax administration and national revenue. The revenue authority model is designed partly to limit direct political interference in daytoday operations by the ministry of finance and partly to free the tax administration from the constraints of the civil service system devas et al. Unfortunately, we are far behind on tax law reform in nigeria as the last time any business tax legislation was enacted or. Administration of current taxes in nigeria vanguard news. For example, nigeria have found ways to enhance the proper administration for collection of revenue in nigeria. Tax reform and administration in nigeria chapter one introduction background to the study the recent global crisis in the world has brought to the fore the need to note that this overdependence on oil creates unnecessary shocks and thus, the need for diversification of the nations resource base and long term growth path. An overview of national tax policy and administration in nigeria. The study investigated the role of tax administration in revenue generation in nigeria between 1994 and 2015.
Withholding tax in nigeria administration and rates. The government is also seeking for a way to incur minimal cost in the process of enforcing tax on nigerias. Recent reforms like tin, unique taxpayers identification number, which was effective in february 2018, and also another taxation scheme called voluntary asset and income declaration schemes. The executive chairman of nigerias federal inland revenue service firs, mr. The firs is vested with the power of administration and management of vat in nigeria. Doc an assessment of tax administration in nigeria. Administration of taxes in nigeria tax nigeria mondaq. Pdf the article is about problems and opportunities of tax administration in gombe state, nigeria find, read and cite all the research you need on researchgate. The nigerian tax system has undergone several reforms geared at enhancing tax collection and administration with minimal enforcement cost. The tax system in nigeria is made up of the tax policy, the tax laws and the tax administration. The survey asked respondents in tax administrations andor finance ministries to respond to 31 questions relating to the scope, legal framework, administration and fiscal impact.
Pdf taxation as a critical fiscal policy measure is a veritable tool, for social. The study is therefore significance to the studies in the subject of income tax administration in nigeria because if further helps in shading light and some relevant concepts. Tax system in nigeria has undergone various policy changes geared at a more effective and efficient way of tax collection and administration. The legal framework and system of taxation in nigeria. The administrative role of the federal, state and local government shall as well be examined in other to identify the causes of tax evasion and avoidance. As a general rule, income on a property rent, hire or lease payments or rights royalties situated in nigeria is liable to tax in nigeria, the place of payment not withstanding. Challenges and prospects, a case study of lagos state board of internal revenue service, largest undergraduate projects repository, research works and materials. The study uses that from federal inland revenue services firs on petroleum.
The fta aims to influence the environment within which tax systems operate. The forum on tax administration fta was established in july 2002 to develop a global response to tax administration issues. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. Impact of tax administration on government revenue in a. Individuals resident in nigeria are taxable on their worldwide income. The countrys tax system is lopsided, and dominated by oil revenue. Federal inland revenue service firs we do our best to provide accurate and up to date information. The tax structure of any economy tends to vary substantially according to the level of development reflecting the availability of tax bases and. Best accounting software for small business owners in nigeria. Business or trade only partially carried on or deemed to be carried on in nigeria. It is a clear statement on the principles governing tax administration and revenue collection. Download undergraduate projects topics and materials accounting, economics, education.
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