Such levies take different hues, as they vary from government to government. Modi telecommunications limited is a company based in bologna, italy with a representative office in nigeria. Taxation and fiscal regulations in nigeria introduction the nigerian tax system has undergone significant changes in recent times. Department of economics, banking and finance, babcock university, ilishan remo, ogun state, nigeria. Tax may be defined as a compulsory contribution contribution imposed by a government authority on goods, individuals, corporate bodies, etc, irrespective of the exact amount of services rendered to the tax payer in return, and not imposed as a penalty for any legal offense. 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. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. Nigerias tax regime is unnecessarily cumbersome and notoriously unfriendly to taxpayers. Welfare effects of taxation on the nigerian economy.
All taxes in nigeria are collected by nigerias federal inland revenue service firs. The impact of tax revenue on nigerian economy case of federal board of inland revenue matthew a. 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. Impact of tax administration on government revenue in a. Welfare effects of taxation on the nigerian economy osundina c. The tax system in nigeria is made up of tax policy and tax laws, stratified into tax assessment. It is however improper for us to give you an insight into the capital gains tax. Taxation, imposition of compulsory levies on individuals or entities by governments. Nigeria tax system is historical odusola, 2006 dates back to 1904 when the personal income tax was introduced in northern nigeria before the amalgamation, through the native revenue ordinances 1917 the west, the direct taxation ordinance no. Tax rate cuts may encourage individuals to work, save, and invest, but if the tax cuts are not financed by immediate spending cuts they will likely also result in an. Taxes are levied in almost every country of the world, primarily to raise.
An assessment of the contribution of tax on nigerias. Welcome to the second edition of recent changes in the nigeria tax, the nigerian tax system has undergone significant changes in recent times, these changes are summarised as follows. In addition to the printed version of the wwtg, individual country taxation guides such as this are available in pdf format which can be downloaded from the pkf website at. Contents features of a taxprinciples of a good tax system1. The chartered institute of taxation of nigeria chartered. Double taxation relief between the federal republic of nigeria and the united kingdom of great britain and northern ireland order under section 451 commencement. Who is paying how much and how do tax systems differ. Capital gains tax in nigeria global property guide. From these laws, three expressions of partnerships are recognized.
Economic activity reflects a balance between what people, businesses, and governments want to buy and what they want to sell. Few, ifany have examined this line of research in nigeria. 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. Issues of taxation in the oil and gas sector in selected. Tax policy forms the basis for tax laws while tax administration is the implementation of the tax laws. An essay on the effects of taxation on the corporate. Introduction following the emergence of multiplicity of taxes in the nigerian fiscal landscape, 1 the joint tax board jtb had. The relationship between indirect taxation and economic growth has been examined severally by different researchers. Mar, 2017 the capital gains tax act contains comprehensive guidelines on how capital gains should be taxed. 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 impact of taxation on revenue generation in nigeria.
Taxation in nigeria understanding nigerian tax system. Thanks to its size, population, and resources, nigeria is dubbed as the giant of africa. 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. The legal framework and system of taxation in nigeria. Rgeneral principles of taxation fundamental principles in taxation taxation taxation is the inherent power of the sovereign, exercised through the legislature, to impose burdens upon subjects and objects within its jurisdiction for the purpose of raising revenues to carry out the legitimate objects of government. Department of commercial law ahmadu bello university, zaria, kaduna, nigeria email. Taxation and economic growth in nigeria onakoya, adegbemi babatunde1 afintinni, oluwatobi ibukun2 1,2department of economics, banking and finance, babcock university, ilishan remo, nigeria abstract over several decades, taxation has been taken as a veritable medium of engineering the growth or performance of an economy.
Taxation in nigeria plus history of taxation in nigeria. Know the administrative machinery and income tax regulations in nigeria. To what extent will nigeria benefit from the proposed luxury tax. Federal government, tax revenue, nigeria, revenue collection, firs.
Business or trade only partially carried on or deemed to be carried on in nigeria. Relevant tax authority may assess and charge tax on the turnover of a business, etc. According to firs there are nine9 types of taxes in nigeria. 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. Department of economics, banking and finance, babcock university, ilishan remo, ogun state, nigeria 2. O university of nigeria, nsukka ou innovation centre agboeze irene e. It requires clear perception of fiscal terms and concepts as well as. Tax legislation an overview of the capital gains tax act. By taiwo oyedele the personal income tax amendment act 2011 was officially gazetted on tuesday 31 january 2012 with an effective date of 14 june 2011.
It also included the terms, conditions, and clauses attached to their taxation. Located in west africa and bordering the atlantic, nigeria is a big country that occupies 356,667 square miles with a total population of 168 million nigeria is abundant in natural resources like coal, gold, lead, iron, salt, copper, and zinc, but it is best known as a big producer of oil. 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. This course is designed to expose students to the principles and practice of the nigerian tax system. Examples are turnkey projects, allocation of income and expenditure between the foreign company and its branch in nigeria, transfer pricing etc. Issues of taxation in the oil and gas sector in selected countries. Overview of nigerian income tax administration unit 1 meaning, types and functions of taxation in nigeria unit 2 tax administration instruments in nigeria unit 3 structure and procedures of nigerian tax system unit 4 returns, assessments, appeal and postponement unit 5 tax collection reference to all necessary legislations module 2 taxation of.
Our local accountant has prepared the tax calculations as followed based on the commencement rules. All taxes in nigeria are collected by nigeria s federal inland revenue service firs. Abiola sanni, phd, fcti senior lecturer department of commercial and industrial law university of lagos, nigeria 1. The purpose was to simplify the process so tax collection in nigeria. Firs and billed to have been launched at pilot offices, this. From correlation, time series and multivariable regression analyses of. Many employers are yet to commence implementation while some. The most important source of government revenue is tax. 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 incurred money spent on domestic and imported articles. P8 lfn 2004 and related matters connected therewith. Effects of income tax changes on economic growth brookings. 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.
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. Personal income tax act arrangement of sections part i imposition of tax and income chargeable. In this article we will discuss about the principles of taxation. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. Chelliah 1989 observed that an increase in indirect taxation compared to direct taxation reduces economic growth more than direct taxation does. I hope the readership have been properly educated on the role of taxation in the nigerian economy. Double taxation relief between the federal republic of. The nigeria tax system, like any tax system, is a tripartite structure which comprises of. Taxation and tax policy as government strategy tools for. Taxation is an instrument of fiscal policy used by government. Introduction globally, taxation is the nucleus and the path to development because it is one of the formidable options to generate revenue by government. The women who felt oppressed by the introduction of tax took to arms forcing the colonial master to withdraw the policy.
In addition, the potential for evasion and avoidance should be minimised. A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer by a. Tax policy, tax legislation and tax administration. Taxation in nigeria and history of taxation in nigeria.
Taxation of partners and partnerships in nigeria ololade olukowi 2 lagos, though, has since outgrown the western region. Introduction taxation is a main source of revenue to governments across the world. Obayemi, acti senior lecturer with lagos state university, lagos i. In arriving at effective capital gains tax rates, the global property guide makes the following assumptions.
Taxation undergraduate project topics, research works and materials, largest undergraduate projects repository, research works and materials. Principles of taxation in nigeria essay 14263 words. In the report, paying taxes 2014 the latest iteration of an annual study by the world bank and pwc that compares the ease of paying taxes globally nigeria ranks 170 out of 189 economies. Where actual profits cannot be determined, the federal inland revenue. Fundamental principles of taxation 31 effectiveness and fairness.
The reduction in the tax revenue base in nigeria and the consequential fall in tax revenue collection led to the question as to the. Department of accounting and finance faculty of management sciences, lagos state university, lagos, nigeria eaddress. Download undergraduate projects topics and materials accounting, economics, education. Many of them have covered all its ramifications while some have effectively appraised the.
Companies income tax cit petroleum profit taxppt value added tax vat. Abstract this is a research work on the impact of taxation on smallscale business in a developing economy. It is made up of 47 sections, with subsections embedded in them. On completion of this module the students should be able to. Impact of tax administration on government revenue in a developing economy. 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. Far more important the findings from this will paperinvariably be useful to stakeholders in tax management and administration and will enable corporations ascertain the effect of taxation on their profitability and growth. Specifically, local governments collect taxes on personal, social and commercial permit fees. The property is directly and jointly owned by husband and wife. 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. The fiscal regime governing petroleum profit taxation in nigeria babatunde ajani adeyemi introduction tax is a compulsory financial exertion by government on its citizens aimed at servicing the needs of the state. Principles of taxation in nigeria 14253 words bartleby. Taxes are the most important source of government revenue.
The general objective of this study is to examine the impacts of value added tax on revenue generation in nigeria. Nigeria lack enforcement machineries which include among other things. Activities of nonnigerian companies, which would attract tax in nigeria and other special issues, are spelt out in the laws. Types of taxes in nigeria types of taxes in nigeria. 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. Taxation should produce the right amount of tax at the right time, while avoiding both double taxation and unintentional nontaxation. However, apart from the southeastern nigeria, where this happened, the introduction of taxation in other part of the country marks the. Economic and fiscal implications of nigerias rebased gdp.
We have a subsidiary in nigeria, this was incorporated in oct 2012. Under current nigerian law, taxation is enforced by the. Moreover, the events in the financial landscape in nigeria. Introduction the president of the federal republic of nigeria in line with national tax policy signed into law the bill for an act to amend the provisions of the personal income tax act, cap. Nonresident companies are liable to tax on the profit or income derived from. The first accounts are 15 months accounts made up to dec 2014. 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. Desiring to conclude an agreement or the avoidance of double taxation and the. The impact of tax reform on federal revenue generation in nigeria dickson.
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