APPRAISAL OF THE LEGAL FRAMEWORK FOR THE TAXATION OF COMPANIES INCOME IN NIGERIA

APPRAISAL OF THE LEGAL FRAMEWORK FOR THE TAXATION OF COMPANIES INCOME IN NIGERIA

BACKGROUND OF THE STUDY

Taxation is a vital element in any country‟s economy. It is the source for funding important necessities such as education, health, care, securities and the million other things that are necessary to the running of the country1. Taxes are the major source of government revenue for funding its activities such as financing of budget and government development plan.Government being a nonprofit making organization needs to generate revenue from taxes and other tax related sources. Fiscal Consideration is paramount in shaping development policies of a given economy either at micro or Marco level. In his remark, Felix Frankfurter2 states the significance of tax thus: Taxation has always been the sensitive nerve of government. The enormous increase in the cost of society and the extent to which wealth is represented by intangibles, are putting public finance to its severest tests. To balance budgets, to pay for the cost of progressively civilized social standards, to safeguard the future and to divide these burdens with substantial fairness to the different interests in the community, strains to the utmost ingenuity of statesmen.

Nigeria as a developing economy has many taxes through which sufficient revenue can be generated to meet government expenditure3. Some of these taxes include companies‟ income tax and petroleum profit tax among others4. These taxes are capable of generating sufficient revenue to finance government activities if they are effectively administered and enforced. However, there is no gainsaying that despite the fact that Nigeria has many companies and other taxable persons from whom revenue can be generated, government is repeatedly complaining of widespread incidence of tax avoidance and evasion5. Nigeria‟s tax system has not succeeded in achieving the goals of revenue adequacy and equity. Although, revenue authorities attempt to generate as much revenue as possible,they end up with little and thus unable to meet the projected target. A lot of reasons are responsible for the inadequate revenue generation by taxation in Nigeria. In the 1970s during the oil boom, government depended much on oil revenue. Petroleum profit tax gained prominence at the expense of other taxes. Nigerian Tax authorities became relaxed that they could not harness other forms of taxes that would have boosted and complemented the nation‟s oil revenue. This consequently brought about loops and slacks in Companies‟ Income Tax Laws. It has equally weakened the administrative and enforcement institutions of other non-oil taxes. Apart from the fact that Nigerian‟s corporate tax laws have not been overhauled and reviewed for a long period of time to make them more realistic and in tandem with international best practices, their provisions are clumsy, unnecessarily verbose and complicated. This tends to increase the cost of tax payers complying with their tax obligations. The Companies Income Tax Act and Petroleum Profit Tax Act are far from fulfilling the above requirements. In fact, they are in the main inelegantly drafted. This makes compliance and implementation difficult and consequently affect revenue generation. Although Nigerian government usually embark on tax reforms, these reforms have failed to introduce any new significant principle in tax administration.

Allied to this, is the fact that a company is a distinct legal entity and by its very nature it poses taxation problems. A series of dimensions and developments have crept into the practice and procedure of corporation taxation which have not been adequately captured as a result of loop holes in our laws.

TOPIC: APPRAISAL OF THE LEGAL FRAMEWORK FOR THE TAXATION OF COMPANIES INCOME IN NIGERIA

Chapters: 1 - 5
Delivery: Email

Number of Pages: 78

Price: 3000 NGN

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