DETERMINANTS OF CORPORATE TAX COMPLIANCE IN NIGERIA
This study examined financial crimes of small scale enterprise in Benin City: Perspective of the Entrepreneur. In order to actualize the objectives of the study, various literature and theoretical issues were discussed. The instrument used for the purpose of this research was gathered through primary and secondary sources. The primary source is through questionnaires while the secondary source extracts from journals by different authors and other publications. The mass of information generated from the questionnaires was summarized in form of table and analyzed using simple percentage. The researcher administered one hundred (100) questionnaires to respondents, out of which eighty (80) were retrieved for the purpose of presenting and analyzing responses to issues raise in the questionnaires. The hypotheses stated in the study were tested using Z-test statistical tool. The findings from analysis revealed among other things that inadequate cash flow policy influence financial crimes in Small Scale Enterprise. The researcher recommends that the management of small scale enterprise should frequently train and re-train their staff in order to increase their knowledge in business management.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background to the Study
Statement of the Research Problem
Objectives of the Study
Scope of the Study
Significance of the Study
Limitation of the Study
CHAPTER TWO: LITERATURE REVIEW
Review of Theoretical Literature
Review of Empirical Literature
CHAPTER THREE: RESEARCH METHODOLOGY
The Research Instrument
Method of Data Analysis
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION
4.2 Descriptive Statistics
4.3 Test of Hypothesis
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
Summary of Findings
BACKGROUND TO THE STUDY
According to Badara (2012), a tax is a compulsory levy by government through its agencies on the income, consumption and capital of its subjects. These levies are made on personal income such as salaries, business profit, interest, dividend, discount or royalties to obtain revenue. It is levied against company profit, petroleum profit, capital gains and capital transfer. Therefore, taxation is a compulsory payment or transfer of resources from private to public sector levied on the basis of the determined criterion and without reference to specific benefits received in order to accomplish some of the nation’s economic and social objectives. Taxation is primarily aimed at generating revenue for government in order to cater for its expenditure.
Palil and Mustapha (2011) opine that, tax compliance has been an important subject of research in a large number of developed and a number of developing countries. Since each country has its own approach to managing tax compliance levels and each has different tax laws and regulations, the factors impacting tax compliance behaviour appear to vary among countries. Factors affecting tax compliance can be viewed from various continuums; for example, economists and policy analysts have given increasing attention to tax compliance theoretically and empirically.
To Alabede, Ariffin and Idris (2011), tax compliance is considered as complying with tax laws in the act of true reporting of the tax base, correct computation of the tax liabilities, timely filing of tax returns and timely payment of the amount due as tax. Any behaviour by the taxpayer contrary to the foregoing statement is noncompliant. They added that, in Nigeria, as in some other developing countries, tax noncompliance is a serious challenge facing income tax administration and hindering tax revenue performance. Despite the various tax reforms undertaken by Nigerian government to increase tax revenue over the years, prior statistical evidence has proven that the contribution of income taxes to the government’s total revenue remained consistently low and is relatively shrinking. However, from all the taxes, personal income tax has remained the most disappointing, inefficient, unproductive and problematic in Nigerian tax system. Tax noncompliance is the failure of taxpayer to meet tax obligations whether the act is done intentionally or unintentionally. The payment of tax is obligatory duty of every citizen whether natural or corporate citizen. As a civic duty, it is expected that citizens will voluntarily comply with such obligation but that is not the case with some citizens.
In this study, effort is being made to examine the determinants of tax corporate compliance in Nigeria.
STATEMENT OF THE RESEARCH PROBLEM
Tax non compliance is a very serious societal problem that is causing much concern and major set back on revenue collection in Nigeria. From all indications it is now clear that if government engages in a complete re-organization of the tax administrative machineries, the problems of non compliance will be reduced to a tolerable limit. It is equally important for the various state governments to make frantic efforts aimed at educating the tax illiterates of their civic responsibilities.
The following questions will be address in the course of this study.
What is the relationship between company size and the level of company’s tax?
What is the relationship between business length and the level of a company’s compliance?
What is the relationship between rates of taxation and corporate tax compliance?
OBJECTIVES OF THE STUDY
The main objective of this study is to examine the determinants of corporate tax compliance in Nigeria.
The specific objectives are:
To examine if there is positive relationship between company size and the level of company’s tax?
There is a positive relationship between business length and the level of a company’s compliance?
There is a relationship between rates of taxation and corporate tax compliance?
The following are the hypothesis of this study.
Ho: There is no positive relationship between company size and the level of company’s tax.
H1: There is a positive relationship between company size and the level of company’s tax.
Ho: There is no positive relationship between business length and the level of a company’s compliance.
H1: There is a positive relationship between business length and the level of a company’s compliance.
Ho: There is no relationship between rates of taxation and corporate tax compliance.
H1: There is a relationship between rates of taxation and corporate tax compliance.
SCOPE OF THE STUDY
The research study focuses on the determinants of corporate tax compliance in Nigeria.
The population of the study consists of all the quoted companies in the Nigeria Stock Exchange, while the sample size is five (5) quoted companies operating in Nigeria.
The time frame of this study is five (5) years i.e. (2007 – 2011).
Geographically, the study will be conducted in Benin City, Edo State.
SIGNIFICANCE OF THE STUDY
It is expected that this study would consolidate existing literature on the issues surrounding the corporate tax compliance in Nigeria. The study would also facilitate the examination of the effects of corporate tax compliance in Nigeria and thus boosting the empirical evidence from Nigeria. Furthermore, given the empirical nature of the study, the outcome of this study would aid policy makers and regulatory bodies in economic modeling and policy simulation with respect to the selected variables examined in the study.
The result of the study would be of benefits to investment analysts, investors and corporations in examining the effectiveness of the corporate tax compliance in Nigeria. It will also be useful in stimulating public discourse given the dearth of empirical researches in this area from emerging economies like Nigeria. Finally, it would also add to the available literature on the area of study while also providing a platform for other researchers who may want to further this study.
LIMITATION OF THE STUDY
The subject matter of this study is constrained by the available limited time which would not allow for a more comprehensive work. Also this work is constrained by the following factors; limited number of published texts on the subject matter, lack of adequate finance, distance from source of data which makes it impossible to get some relevant data and lukewarm attitude of some officials towards researchers. In the course of data collection more, there may be some personal judgement which may not be absolutely correct. Finally, possible mistakes of the different writers whose work were consulted might be reflected.
Alabede, J. O., Ariffin, Z. B. and Idris, K. M. (2011), Determinants of Tax Compliance Behaviour: A Proposed Model for Nigeria, International Research Journal of Finance and Economics, 78:121 – 136.
Chaudhry, I. S. and Munir, F. (2010), Determinants of Low Tax Revenue in Pakistan, Pakistan Journal of Social Sciences, 3(2): 439 – 452.
Palil, M. R. and Mustapha, A. F. (2011), Tax Evolution and Concept of Tax Compliance in Asia and Europe, Australian Journal of Basic and Applied Sciences, 5(11): 557-563
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