Effect of tax rate,tax avoidance and tax evasion on revenue generation in Nigeria
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Date
2014
Journal Title
Journal ISSN
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Publisher
Faculty of Management & Social Sciences, Ibrahim Badamasi Babangida University, Lapai.
Abstract
The shift from dependence on oil revenue to Internally Generated Revenue (IGR) of which tax constitutes a huge proportion to finance developmental functions in Nigeria has not yielded the required results due to draw down on the country’s revenue base by tax rate, tax avoidance and tax evasion practices. This study, therefore, evaluates the effect of these dominant factors (tax rate, tax avoidance and tax evasion) on company income tax revenue in Nigeria, using a survey method via the instrument of questionnaire on a sample of 396 employees of Federal Inland Revenue Service in Nigeria. The reliability confirmatory test yielded 0.81 and 0.78 coefficients (Crombach Alpha) for dependent and independent variables respectively while hypotheses of significant relationships between and among the dominants factors and companies income tax revenue were tested using Analysis of Variance (ANOVA) model. The study finds a significant tax evasion and tax avoidance practices among Nigerian companies while prevailing ax rate has been adjusted fairly high which has resulted into negative significant impact on tax revenue. The study also reveals lack of transparency on the use of tax revenue which fuels more tax evasion and tax avoidance practices. It was therefore, recommended that tax rate should be lowered while Nigerian government should demonstrate accountability and transparency in the utilization of company income tax revenues on developmental functions with a view to discourage tax avoidance, tax evasion and boost revenue base as well.
Description
Keywords
Tax rate, tax avoidance, tax evasion, revenue
Citation
Olaniyi, T.A, Olabisi, S.O, Adeyemi, Z.A. & Sakariyahu, O.R. (2014): Effect of tax rate, tax avoidance and tax evasion on revenue generation in Nigeria. Lapai International Journal of Management and Social Sciences. 7 (1); 100-112