ABSTRACT
A tax is a compulsory levy
imposed on the income or profit of an individual, partnership and corporate
organisations for the financing of government expenditure without recourse to a
corresponding benefit from tax payer. Assessments are raised on total profit at
the rate of either 30 percent or 20 percent if it is a small company whose
turnover is below ₦1million naira.
Various types of assessment s are raised on the company. This could be
self-assessment, government assessment, back year assessment, best of judgement
(BOJ) assessment or jeopardy assessment. Collection is basic necessity to tax
revenue after assessment has been raised. This research work is aimed at
appraising the tax collection system in Nigeria taking Federal Inland Revenue
Service as a case study. It examined the workings both at the local and state
levels but focused more on the Federal Inland Revenue Services. It reviewed the
old system, the reasons why a new idea muffed. The operations of the new method
were also explained and clearly stated. The methodology adopted in this study
is the survey research design. There were interactions with staff of Federal
Inland Revenue Service of various cadres and a few tax payers and tax
consultants with structured questionnaire to know their opinion. 56
questionnaires were administered out of which 35 were duly completed and
returned. The findings from research work revealed that appraisal of tax
collection system will bring more money to the coffer of the government and all
incidents of frauds, cheque diversion and other malpractices will be curbed.
Based on the findings of this
study, recommendations made are that constant monitoring of the activities of
the designated banks is necessary to determine their level of compliance while
adequate training should be provided for collection staff to enhance their
efficiency and productivity.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
A tax is a compulsory levy
imposed on the income/profits of an individual, partnership and corporate
organizations for the financing of government expenditure without recourse to a
corresponding benefit from tax payer.
Every tax imposed
on Nigerian companies or organisations needs continual interpretation of its
specific application and effect on the various transaction of the organisation.
The field of taxation changes every moment or every day as announced by the new
ruling courts and also as are being made by new government.
Tax is paid only
on the profit of the company after all other deductions and allowances such as
capital allowance, investment allowances. The rate of tax levied and payable
for each year of assessment in respect of the total profit of every company is
thirty kobo for every naira as contained in section 29 of Companies Income Tax
Act 2007 as amended. A company which is yet to commence business after at least
6 months of incorporation shall for each year it obtains a tax clearance
certificate pay a levy of (a)
Where in any of
the basis period for the year of assessment in which a company commenced
business and the next following four years of assessment as determined under
the provision of section 29 of the Act, a Nigerian company engaged in
manufacturing or agricultural production, mining of solid minerals or wholly
export trade, earns a total gross sales (turnover) of below one million naira,
there shall be levied and paid by the company, tax at the rate of twenty kobo
on every naira of the total profits.
Section 28A of
Companies Income Tax Act 2007 states that where in any year of assessment the
ascertainment of total assessable profits from all sources of a company results
in a loss or where a company’s ascertained total profits results in no tax
payable or tax payable which is less than the minimum tax then shall be levied
and paid by the company the minimum tax as prescribed in subsection (2) of the
Act.
(i)
0.5 percent of gross profits or
(ii)
0.5 percent of net assets or
(iii)
0.25 percent of paid up capital or
(iv)
0.25 percent of turnover of the
years, whichever is higher.
If the turnover
is higher 500,000 be whatever is payable in paragraph (a) of this subsection
plus such addition tax on the
amount by which the turnover
is in excess of ₦500,000 at a rate
which shall be 0.125 percent.
The provision
shall not apply to a company carrying on agriculture trade or business or the
company with at least 25 percent imported equity capital and lastly, any
company for the first four calendar years of its commencement of business.
Collection is basic necessity
to tax revenue after assessment has been raised. The tax payer is expected to
pay the assessed tax liabilities to any of the collecting banks in his or her
region with the assessment notices indicating the tax type being paid. This
could be company income tax, Education tax, Capital gains tax, Personal Income
Tax for resident of Abuja, and non resident individuals, Value Added Tax......
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