Tax evasion and tax avoidance, a problem which seems to have defied solution, had. Given that the purpose of introducing electronic tax system is to improve revenue collection which will in turn improve the countrys economic growth, the study empirically examined how the implementation of etaxation in 2015 has affected tax revenue, federally collected revenue. Tax avoidance and tax evasion what is the difference. This study examined the impact of etaxation on nigeria s revenue and economic growth. This paper focuses on tax evasion and tax avoidance behavior of the self employed, using some selected states in. Effect of tax avoidance and evasion to the economic development of nigeria project material. A major challenge to government in generating revenue has been the increasing rate of tax evasion and tax avoidance. Tax evasion and avoidance defiles sustainable infrastructural development in any constituted society. However, despite the government efforts to bridle the practices of tax evasion and tax avoidance in nigeria, the problem still persists. Therefore, this study seeks to investigate the effect of tax evasion and avoidance on nigerias economic growth. Illustration of difference between tax planning, tax avoidance and tax evasion. Effects of tax evasion and avoidance on the nigerian economy.
Chapter 8 tax avoidance and tax evasion iarc publications. Vi, issue 4 july 2018 1428 petroleum nigeria limited office was closed for not remitting n107. O 2 0 effect of tax avoidance and tax evasion on personal income tax administration in nigeria. Tax avoidance, understood as the use of the socalled loopholes in the tax legislation to reduce ones tax payments increasingly tops news charts. Department of accountancy, nnamdi azikiwe university, awka, nigeria abstract tax is an important avenue for government to raise money in order to finance her projects and programmes. G department of accountancy, osun state college of technology, esaoke, nigeria abstract. Judicial and legislative approaches to tax evasion and. Effect of tax avoidance and tax evasion in personal income tax. Global tax administration initiatives addressing tax evasion and. Law and economics of taxation, tax avoidance and tax. Uniprojects aim of providing effect of tax avoidance and evasion to the economic development of nigeria project research material is to reduce the stress of moving.
Effect of tax avoidance and evasion to the economic. Impact of electronic taxation on tax evasion and avoidance. Wellstructured questionnaires were administered in the target respondents and were analysed using. American journal of humanities and social sciences vo1.
Impact of tax evasion and tax avoidance in nigeria economy. Ilaboya and ofiafoh 2014 on their study of tax ratio and output volatility in nigeria sand. The evasion is however made possible by sharp practices and collusion between the tax officials and the operators of the ngos. Tax evasion and avoidance remains the greatest problems plaguing tax administration in nigeria. The tax structures themselves are undoubtedly skewed by the realities of tax evasion, avoidance, and administrative costs. Obviously, tax evasion and avoidance practices are two major fiscal challenges that must be addressed with all sense of duty by the government. An empirical study of tax evasion and tax avoidance. Therefore, tax evasion and avoidance are important factors to be considered as they affect both the volume and nature of government finances which is the key to economic development. To solve the research problem, both primary and secondary data were collected. It aimed to give a detailed examination of the effect of tax avoidance on the economic growth and development in nigeria. Introduction taxation is machinery or process in which society and communities or group of individuals are contributing into. Why avoidance, evasion and administration are central, not peripheral, concepts in public finance 1426 1. The difference between tax avoidance and tax evasion.
It is an attempt to evade tax liability with the help of unfair means. The existence of tax evasion and tax avoidance in nigeria tax. In contrast, tax avoidance is the legal use of tax laws to reduce ones tax burden. Tax evasion and avoidance practices, in a way, constitute acts of corruption. In other words, tax avoidance is completely lawful because only those means are employed which are legal, while tax evasion is considered as a crime in the whole world, as it resorts to various. Tax evasion and avoidance behaviour of the selfemployed nigerians.
To determine the effect of tax evasion and avoidance on the revenue generated in abia state. Louisa n amaechi, okonta paterick onochietax evasion, neglectavoidance and its socioeconomic implications in nigerian economy european academic research vol. The starting point is an incursion into the history of taxation, especially personal taxation in nigeria. Tax evasion is illegal and would result in punishment by way of penalty, fines and sometimes prosecution. The effect of tax evasion and avoidance on nigerias. Data were collected through documentary analysis, questionnaires and interviews. However, one of the greatest problems facing nigerian tax system as well as africa is the problem of tax evasion and tax avoidance. On the contrary, tax evasion is a practice of reducing tax liability through illegal means, i. Impact of etaxation on nigerias revenue and economic.
Tax evasion is the illegal evasion of taxes by individuals, corporations, and trusts. Tax evasion and tax avoidance, a problem which seems to have defied solution, had been deviled the tax system right from colonial times. This work evaluates the effect of tax avoidance and tax evasion on economic growth and development in nigeria 20062016. Attempts are also made to define and distinguish evasion and avoidance while at the same time possible reasons are explored for explaining why people react to evasion and avoidance. The study of the effects of tax evasion and tax revenues. This will assist government to make life more comfortable for her citizen. Tax evasion is a deliberate on the part of the tax payers to reduce their tax liabilities through illegal means or an attempt not to pay tax due.
Whereas evaders can be found among payer and trader, having carefully examined the above trend of events, the researcher then decides to carry out evasion study to unmask the causes and effect of tax evasion and avoidance on personal income of board of internal revenue in abia state with a view of finding solution to them. Effect of tax avoidance and tax evasion on personal income. This reaction are the problems this research work going to address. This study is about the impact of tax evasion on revenue collection performance in tanzania. The study of the effects of tax evasion and tax revenues on economic stabilities in oecd countries mohsen mehrara, yazdan gudarzi farahani. The problem of tax evasion and tax avoidance in nigeria. Taxation is process on machinery by which group or. The distinction between this tax avoidance and tax evasion is that tax avoidance is not considered a criminal offence whereas tax evasion is a criminal offence.
The way taxes are collected is of great importance. Effects of tax evasion on government revenue generation in oyo state, nigeria folayan d. The study investigated the impacts of electronic taxation on tax avoidance and evasion in nigeria. The effect of tax evasion and avoidance on revenue. The subject of the study is of high importance as tax evasion and avoidance practice adversely hamper governments capacity to provide the basic social amenities needed by the populace. Omorogiuwa 1981 has opined that ineffective tax administration is the main factor responsible for large scale tax evasion in nigeria. It should leave little room for tax evasion and tax avoidance.
However, when there are leakages in tax collection through evasion, no development can take place, thus in most countries where, there is high rate tax evasion and avoidance, it is usually associated with high unemployment. Thus, this article examines the behaviour of taxpayers towards tax evasion and tax avoidance in nigeria. Getting a competent, honest tax expert can save you from going over the line to tax evasion. The effects of tax evasion and avoidance on the nigerian economy abstract this research project is a very crucial study on the effects on tax evasion and avoidance on nigeria economy. In nigeria the incidence of tax evasion and avoidance by tax payers is high, leading to low level of government revenue which further reduces the level of government expenditure, culminating into a reduction in the income savings and expenditure of households and firms, leading to low level of economic activities and economic growth. It is the view of many people that the loss of revenue caused by widespread tax evasion and tax avoidance in nigeria is due to inefficient and inept tax administration. Causes of tax evasion in nigeria and effects on the. Difference between tax avoidance and tax evasion with. To proffer solution to the problem of tax evasion and avoidance. Tax avoidance, tax evasion, tax heavens, illicit financial flows and global tax governance are real buzzwords that have come to dominate current international political and financial domains. This study focuses on the factors that influence tax avoidance and evasion in nigeria. Just be aware that there are some gray areas in the law. It examined specific factors for rising tax evasion and establishing mechanism to curb the problem.
However, tax evasion and tax avoidance are important factors to be considered as they affect both the volume and nature of government finances which is the key to economic development. The federal republic of nigeria, and all the federated units, that is, all the state governments in the country have deployed various measures, which of course, are commendably, for the purpose of making such that, tax evasion and tax avoidance is curtailed, as well as, minimised in nigeria. The article establishes that tax evasion and avoidance is a very serious social menace causing a major setback on nigeria economic development. To what extent does tax evasion and avoidance affect nigeria economy. The sampled for the study was taken from ekiti state of nigeria focusing on some banks and the board of internal revenue of the state. This study was designed to identify the effects of tax evasion on government revenue generation in oyo state. The impact of tax evasion and tax avoidance in nigeria economy chapter one history of development in nigeria their so many form of taxation dating back of the days of our great ground father whose by communities dated themselves through communal labour to prosecute community projects. To examine relationship between tax rates, tax evasion and tax avoidance. Tax evasion, neglectavoidance and its socio economic. This brings about reactions from various sections of the economy. Effects of tax evasion and avoidance tax evasion and tax avoidance has undoubtedly affected adversely the government revenue generation capability and the economy as a whole.
This is approved for students in accountancy business computer science economics engineering arts. Problems within the tax administration machinery is one of the causes of tax evasion and avoidance in nigeria, such problems arises from the loopholes found in the provision of tax law, and sometimes such problems ranged from tax law, untrained man power, transportation issues and corrupt practices endulged by taxpayers. The research instrument used in collecting the data was questionnaires and oral interview. While some had blamed the situation on tax authorities for not living up to expectation with regards to tax administration. Tax evasion and avoidance is a common drama acted in many local government areas in the country most especially the adoodo ota local government area, unknown to most of the occupants of such areas the effects of such actions. Case study of federal inland revenue service firsogun state branchproject topics and materials in nigeria. Findings from the empirical analysis using kendalls wtest and chisquare test statistics reveal that tax evasion and avoidance have adversely affected economic growth and development in nigeria. Get free research paper on the roles of multinational companies in tax evasion and tax avoidance in nigeria. The impact of tax evasion and tax aviodance in nigeria economy. The study examines the effect of tax avoidance and tax evasion on personal income tax administration in nigeria.
Evasion, avoidance, and real substitution response 1428 1. This research project is a very crucial study on the effects on tax evasion and avoidance on nigeria economy. Nigeria tax system was identified with many problems, such as tax evasion, avoidance and. Problems within the tax administration machinery is one of the causes of tax evasion and avoidance in nigeria, such problems arises from the loopholes found in the provision of tax law, and sometimes such problems ranged from tax law, untrained man power, transportation.
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