AN EXAMINATION OF CORPORATE INCOME TAX LEGISLATION AND ITS IMPACT ON REVENUE GENERATION IN NIGERIA
AN EXAMINATION OF CORPORATE INCOME TAX LEGISLATION AND ITS IMPACT ON REVENUE GENERATION IN NIGERIA
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Date
2021-11
Authors
NWOKENEKWU, Emmanuel Uzoma
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Abstract
This thesis titled “An Examination of Corporate Income Tax Legislation and its Impact on
Revenue Generation in Nigeria” aim at utilizing the Companies Income Tax Act to enhance
revenue generation in Nigeria, which is used to fund development in the economy. Company
income tax is a major source of revenue to all governments in the world, Nigeria inclusive. It is
levied by government against companies operating in Nigeria, which is used to raise revenue for
sustainable economic development and administration of governmental policies. Companies
income tax (CIT) is a tax on the profits of registered companies carrying on business in Nigeria.
It is regulated by Companies Income Tax Act (CITA) Cap.C21 Laws of Federation of Nigeria,
2004.The study adopted essentially doctrinal method of research which involved the collection
of materials or facts from, Constitution of Federal Republic of Nigeria 1999 (as amended), Tax
Statutes, case laws, which the geographical application is limited to Nigeria only, various text
books, articles contained in law journalsand internet materials that are relevant to the subject
matter of the research were used. However, empirical method of research was also adopted in
some aspects, which consist of questionnaire and interviews through which facts and data were
collected, analyzed and interpreted. Accordingly the research specificallyachieved the following
objectives; effective and efficient management and collection of taxes through Company Income
Tax Act, it also determined the extent of contribution of corporate income tax to revenue
generation in Nigeria and determined the tangible things/development taxpayers enjoyed as a
result of payment of their taxes, and were inspired to pay more. The problem of the research
were the conflict in the classification of companies in Nigeria arising from Section 394(4)
CAMA 2020, Companies Income Tax Act (CITA) Cap.C21 L.F.N 2004 and Finance Act 2020,
the effect of conflicting definitions of small companies under CITA and CAMA 2020, also
impacts the required documents for the purposes of filing the company‟s annual income tax
returns. Section 402 of CAMA 2020, exempts companies which are yet to commence business
and small companies from appointing auditors and conversely in line with Section 55 CITA, all
companies are required to file annual self-assessment returns. Finance Act has amended Section
55 CITA, such that instead of audited accounts, FIRS may specify an alternative form of
accounts, to be included in the tax returns. Other problems of the research include the tax
evasion and avoidance which have hindered increase in revenue generation of the federal
government, inadequate tax personnel to cover all areas of operations of FIRS to enhance
revenue generation, mismanagement of tax payments collected by officials of FIRS, and
unreliable and inadequate data problem that have hindered FIRS from improving her
functions.The findings of the research based on the doctrinal and empirical methods of research
used were, monetary penalties/fines contained in the Companies Income Tax Act are
insignificant and inadequate to deter the offences for which they are prescribed for; high rate of
30% tax for large companies discouraged the investors from investing in Nigeria and also
discouraged the local industries in Nigeria from paying their correct taxes; conflicts in the
classification of companies in Nigeria between CAMA 2020 and CITA for tax purposes have
created ambiguities, for instance a company with a turnover of N110million qualifies as a large
company under CITA for tax purpose, the same company do not qualify as a small company
under CAMA. and lack of skilled manpower and modern technology in the operations of FIRS
adversely affected her revenue generation. The research recommended that adequate monetary
penalties/fine should be provided to deter offences, for instance the fine of N600.00 provided for
unauthorized collection of taxes contained in Section 95(b) of CITA should be increased to
N50,000.00; reduction of 30% tax rate for large companies to 25% will encourage investors to
invest in Nigeria; harmonization of the conflict between CAMA 2020 and CITA over
classification of companies,is necessary to ensure uniformity and confidence of taxpayers and
stakeholders and eliminate resultant conflicts. Finally, the research concluded that corporate
income tax legislation has significantly impacted on the revenue generation in Nigeria.
Description
A THESIS SUBMITTED TO THE SCHOOL OF POSTGRADUATE STUDIES,
AHMADU BELLO UNIVERSITY ZARIA, NIGERIA, IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF DOCTOR OF
PHILOSOPHY OF LAWS – PhD