Effect Of Electronic Tax System On Tax Compliance In Nigeria

The study focuses on the appraisal of the effect of electronic tax system on tax compliance in Nigeria. A survey research design was adopted, the population comprises all the staff of Federal Inland Revenue Service Port Harcourt, a simple random sampling technique was used to select about 28 respondents a for the study. The specific objectives include: i. To identify the causes of tax fraud in Nigeria tax system. To examine the legal and administrative measures used to address tax frauds. iv. that tax fraud can be curbed through computerization of tax administration system and keeping counteracting measures in case of security breach; that electronic tax would quicken the tax inspectors to check accounting data of taxpayers so as to fight against tax fraud and that strong and effective tax administration through electronic taxation would curb tax fraud.

Introduction

1.1 Background of the Study

The fundamental reason for the imposition of tax is to generate revenue for the government. But numerous challenges facing the collection of tax has impeded on the revenue yield of government. According to Jibrin et al (2012), tax is a mandatory payment by government on persons and firms to generate revenue to meet government expenses. This is essential for the economic growth and development of the nation. Ogbonna and Appah (2012), stated that tax constitute one main source of government revenue all over the world". Azubuike (2009), noted that revenue from tax is utilized by the government to provide public goods, and essential social services for the people. Taxes represent an instrument of fiscal policy and major economic reform of the world. However, Ayua (1996) stated that the tax system in Nigeria is faced with challenges of tax evasion, avoidance and record falsifications leading to low revenue yield for the government. This development led to the introduction of electronic taxation which is an easy and friendly, user based platform to facilitate the easy collection of tax. Nellen (2003) posits that the aim of the electronic taxation is to impede revenue loss as a result of tax evasion and other fraudulent activities and to ensure neutrality. The Nigeria National Tax Policy (2012) stated that the benefits of electronic taxation include simplicity, certainty and economic efficiency. But, the implementation of electronic taxation is still at the infant stage. The study seeks to appraise the effect of electronic tax system on tax compliance in Nigeria. A case study of federal Inland Revenue Service Port Harcourt.

1.2 Statement of the Problem

The Nigerian tax system is sick and faced with many challenges. According to Nellen (2003), the challenge of tax administration include poor tax collection, tax evasion, avoidance and record falsifications which constitute the reason for poor revenue yield for the government. The introduction of electronic tax system was to proffer solution to the challenges initially faced by the traditional method. Consequently the study seeks to investigate the effect of electronic tax system on tax compliance in Nigeria. A case study of federal revenue service Port Harcourt.

1.3 Objectives of the Study

The Main Objective of the study is to investigate the effect of electronic tax system on tax compliance in Nigeria. A case study of federal revenue service Port Harcourt;

The specific objectives include:

To identify the causes of tax fraud in Nigeria tax system.

To examine the legal and administrative measures used to address tax frauds.

To investigate the weaknesses in addressing tax fraud by tax authority.

To establish the prospects and impacts of electronic taxation on the economy of Nigeria.

1.3 Research Questions

What are the causes of tax fraud in Nigeria tax system?

What are the legal and administrative measures used to address tax frauds?

What are the weaknesses in addressing tax fraud by tax authority?

What are the prospects and impacts of electronic taxation on the economy of Nigeria?

1.4 Significance of the Study

The study shall determine the effectiveness of the electronic tax system in trying to address the challenges of tax collection and revenue generation for the government.

1.5 Statement of the Hypotheses

The statement of the hypothesis for the study is stated in Null as follows:

HO: The effect of electronic tax system on tax compliance in federal revenue service Port Harcourt is negative.

HO: The level of tax compliance in federal revenue service Port Harcourt is low.

1.6 Scope of the Study

The study focuses on the appraisal of the effect of electronic tax system on tax compliance in federal revenue service Port Harcourt.

1.7 Limitation of the Study

The study was confronted with logistics and geographical factors.

1.8 Definition of Terms

Tax Defined

Tax is a mandatory payment by government on persons and firms to generate revenue to meet government expenses. This is essential for the economic growth and development of the nation.

Multiple Taxation Defined

Multiple taxation is the imposition of tax by two or more jurisdictions on the declared income asset or financial transaction

Organisation Defined

Organization is a set of interactive processes that expected performance from them -executive operation of processes- is realized among different organizational units (Bayazi Tehranvand et al, 2009).

Productivity Defined

Productivity is viewed as the increase in the quantity of output produced over a given quantity of input from the productive system. National productivity is the increase in the living standard of the people.

Summary, Conclusion and Recommendation

5.1 Summary

This study tried to assess electronic taxation and tax fraud in Nigeria. The study was set to address four objectives which include:

To identify the causes of tax fraud in Nigeria tax system.

To examine the legal and administrative measures used to address tax frauds.

To investigate the weaknesses in addressing tax fraud by tax authority.

To establish the prospects and impacts of electronic taxation on the economy of Nigeria.

Based on the objectives above, the findings of the work include that following:

That the causes of tax fraud in Nigeria include the non-accountability of revenue collected, the complexity of paying tax in Nigeria, the manual system of tax administration, corruption and malpractices in the system, the nature of the traditional tax system, lack of autonomy of tax authorities and the low quality of the services in return for taxes and low tax morale.

That the legal and administration measures used to address tax fraud so far include but not limited to address tax compliance costs; address weak enforceme4nt at the national level; and the use of incentives to encourage tax payments.

That the weakness in addressing tax fraud by tax authority in Nigeria include the resistance to change by taxpayers and even the informed nature of most of the tax payers and the authority on the electronic tax payment system.

That tax fraud can be curbed through computerization of tax administration system and keeping counteracting measures in case of security breach; that electronic taxation would quicken the tax inspectors to check accounting data of taxpayers so as to fight against tax fraud and that strong and effective tax administration through electronic taxation would curb tax fraud in Nigeria.

5.2 Conclusion

The purpose of this study is to assess electronic taxation and tax fraud in Nigeria. Four research questions guided the study together with two hypotheses.

In this study, a survey research design was adopted, the population comprises all the staff of FIRS Port Harcourt, a simple random sampling technique was used to select about 28 respondents a for the study. A questionnaire was the instrument for data collection. Relevant literatures were reviewed which guided the objectives and methodology of this study. As result of the field study and analysis of results, the following findings were made:

That the causes of tax fraud in Nigeria include the non-accountability of revenue collected, the complexity of paying tax in Nigeria, the manual system of tax administration, corruption and malpractices in the system, the nature of the traditional tax system, lack of autonomy of tax authorities and the low quality of the services in return for taxes and low tax morale.

That the legal and administration measures used to address tax fraud so far include but not limited to address tax compliance costs; address weak enforceme4nt at the national level; and the use of incentives to encourage tax payments.

That the weakness in addressing tax fraud by tax authority in Nigeria include the resistance to change by taxpayers and even the informed nature of most of the tax payers and the authority on the electronic tax payment system.

That tax fraud can be curbed through computerization of tax administration system and keeping counteracting measures in case of security breach; that electronic taxation would quicken the tax inspectors to check accounting data of taxpayers so as to fight against tax fraud and that strong and effective tax administration through electronic taxation would curb tax fraud in Nigeria.

5.3 Recommendations

Following the analysis of the research topic, the researcher has come to the conclusion that the following actions in the form of recommendations can adopted:

Government should support with everything on their disposal the establishment of e-tax administration so as to start reducing the level of tax fraud in the system.

The system must be secured to guarantee taxpayer confidentiality and minimize fraud especially with respect to online payment.

There should be a committee by the federal government under the watch of the FIRS and Joint Tax Board to ensure the effective implementation of the integrated tax administration system at all levels of government.

Proper monitoring and control of the system must be put in place such as collection of relevant information about users in order to evaluate usage and address challenges faced and also provision of data validation mechanism as is the case with smart systems.

Tax incentives should be granted to E-tax users in order to encourage taxpayers in adopting the system as well as ensure compliance.

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