SOURCE:

Faculty: Law
Department: Law

CONTRIBUTORS:

Oguadimma, C. B.
Umenweke, M. N.

ABSTRACT:

Taxes are vital tools for development and governance of any country. By paying taxes, citizens contribute to building sovereign states and the governments use these revenues responsibly to meet their obligations in providing essential public services to all citizens. Taxes are very important to every nation that it cannot be underestimated. The richest countries in the world generate revenue internally through effective tax administration strategy which ensures that citizens, firms and institutions honour their tax obligations without fear or favour. Self Assessment system (SAS) or regime has become the key administrative approach for both personal and corporate taxation in developed countries including USA, UK and Australia. This approach emphasizes both the taxpayers’ responsibility to report their income and the need for them to determine their own tax liabilities. In countries where self assessment has been adopted, it has generally been adopted with the objective of improving overall compliance with the tax laws and increasing operational efficiency by collection of tax revenues promptly, personalizing the system of returns, processing and reducing the incidence of disputed assessments. In other words, the primary purpose of adopting SAS in most developed countries is to increase voluntary compliance by taxpayers to honour their tax obligations. This research is therefore an academic contribution to firstly investigate and critically analyze taxpayers’ voluntary compliance in the self assessment regime in Nigeria and secondly, provides a comparison of Nigerian taxpayers’ compliance rate using the SAS with other selected countries like the United States of America, the United Kingdom, Australia and other Organization for Economic Co-operation and Development (OECD) member countries. This also include a critical analysis of voluntary tax compliance under the self assessment regime (SAR) and fashioning out ways of encouraging voluntary compliance under the self assessment system most especially in the informal sector. The researcher adopts the doctrinal methodology using the comparative, expository and analytical approaches. Also relied on are the primary and secondary sources of data collection. The findings of this study show that since the introduction of the self assessment regime in Nigeria, it has not been able to achieve the primary purpose of voluntary compliance in tax payments when compared with some developed countries that adopted the same before Nigeria. Having found that the level of voluntary tax compliance in Nigeria is very low, the work called for certain measures to be undertaken by the relevant tax authorities in order to promote the principle of voluntary compliance in Nigeria. This work specifically recommends the use of awards, recognitions and incentives to build voluntary compliance in Nigeria and also de-emphasis on documentation in the informal sector. Further it is recommended that the engagement of the informal sector and their associations on tax discussions and tax statutes boards be legislated and implemented. The need for sustained tax education of the informal sector and the need to have strategic plans by the FIRS are also recommended. In addition, this work recommends legislative reviews or amendment of various provisions in the tax laws that seem to hinder the proper administration and enforcement of tax laws in Nigeria. These measures among others propounded in this research will enhance taxpayers’ voluntary compliance thereby increasing government revenue.