COMPANIES INCOME TAX AND THE NIGERIA ECONOMY: CHALLENGES AND PROSPECTS

CHAPTER ONE

1.1 BACKGROUND OF STUDY

1.2     STATEMENT OF PROBLEM

Companies’ Income tax is an essential structure in the Nigerian tax system. It also contributes astronomically to the total revenue generated by the government. Tax revenue mobilization as a source for financing development activities in Nigeria has been a difficult issue primarily due to the indulgence by companies and individuals in various forms of resistance such as pronounced tax invasion, Tax avoidance and other corrupt practices. Other problems militating against the efficient and effective revenue generation through company income taxation include;

Non compliance by companies to relevant tax laws. In efficient poor tax administration in Nigeria company income tax structure. (Adegbie and Fakile, 2011).

More so, companies and individual see companies income tax as an undesirable imposition which bears no relationship on the service provided by the state.About 80% of companies in Nigeria provides their electricity, security and other amenities needed. Lastly, the tax administration is full of loopholes that even the people in charge of tax administration cannot be trusted any more, (Adegbie and Fakile, 2011).

1.3     OBJECTIVE OF STUDY

The main aim of this study is to;

explore the relationship between companies income tax in Nigeria and economic development of the nation. determine the relationship between tax administration and revenue generation in the system with a view to addressing tax invasion and avoidance. identify the administrative loopholes in the machinery of company income tax. examine if governments ineffectiveness in providing basic infrastructural facilities discourages companies from complying willingly with their tax obligation.

1.4     RESEARCH QUESTIONS

Is there a positive relationship between companies’ income tax and economic development in Nigeria? To what extent does tax evasion and tax avoidance affect revenue generation in the system? Are there administrative loopholes in the machinery of companies’ income tax in Nigeria? Does government’s ineffectiveness in the provision basic infrastructural facilities affect companies’ willingness to comply with their tax obligations

1.5     RESEARCH HYPOTHESIS

For the purpose of this research work, the following hypothesis has been developed:1.       Ho:   Companies income tax has no positive impact on the economicDevelopment of Nigeria.Hi:    Companies income tax has a positive impact on the economicDevelopment of Nigeria.2.       Ho:   Tax avoidance and tax evasion does not affect the quantum of revenue generated in Nigeria. Hi:    Tax avoidance and tax evasion affects the quantum of revenue generated in Nigeria.3.       Ho:   Government's effectiveness in the provision of basic infrastructural                                       Facilities do not affect companies’ willingness to comply with their tax obligations.        Hi:    Government’s ineffectiveness in the provision of basic infrastructural Facilities affects companies’ willingness to comply with their tax obligations.