The chapter is devoted to the review of related literature and method used in collecting data on the topic of study. It is expected that in the course of this review the concept of taxation would be defined and explained with special interest on the personal income tax administration in Nigeria.

According to Chartered Institute of Taxation of Nigeria Tax guide and Statutes, Nigerian tax law is purely statutory, the tax system thus features a wide mixed range of statutes by which various governments in the country seek to charge and collect revenue for public expenditure. Of these, the most widely based are income taxation. The personal income tax act makes provision for the country, adding that liability to personal income tax in Nigeria does not depend on the domicile or nationality of the tax payer (Abdulrazaq, 2002)


The importance of taxation in the activities of any government cannot be overemphasized. The world over, taxes is one major source of government revenue, however, not every national government have been able to effectively exploit this great opportunity of revenue generation. This can be attributed to a number of reasons including the system of taxation; tax legislation; tax administration and policy issues; over reliance on other sources of revenue (such as foreign aid and grants); corrupt practices in the system – especially as it relates to the system of tax collection and behaviour of citizens towards tax payment; and ease of tax payment. The willingness to pay tax, which may depend on the other aforementioned issues in tax-revenue generation, remains a key taxation-challenge in Nigeria. In the ease of tax payment, evidence from the World Bank Doing Business Report 2011 and 2012, shows that Nigeria ranked 109 and 138, respectively, out of 183 countries; in Sub-Saharan Africa, it ranked 27 out of 46 countries. This result is, despite some improvements the government has made to the tax system in the recent past. The Federal Inland Revenue Service (FIRS), for instance, which was first established as an operational arm of the Federal Board of Inland Revenue (FBIR) in 1993 but autonomous in 2007, was saddled with the responsibility of controlling and administering different taxes as well as accounting for all taxes collected. Another innovation by the government is the Tax Identification Number (TIN) programme, which has objective of carrying out a successful rollout and implementation of TIN for Nigeria. The system developed a relational database linked to all relevant stakeholders in Nigerian tax administration. There is also the Joint Tax Board (JTB), amongst others, which are set up to address problems of the tax policies and its implementation, tax collection, and the taxpayers compliance in the country. Thus, an integral part of the tax system is the people’s attitude towards tax payment. Further evidences that affect willingness will include multiplicity of taxes that is, paying similar taxes on the same or substantially similar tax base, ineffective and inefficient tax collection structure, poor tax awareness, tax transparency and tax accountability. The issues raised have implications on the willingness to pay tax in Nigeria, with the indirect effects on actual revenue generated from taxation. The end-point implication of strong unwillingness to pay tax is a crippled government that is unable to implement its growth and development objectives. The significance of the willingness to pay is also better related in the case of the informal sector, where the government is limited in terms of monitoring their affairs. The willingness of the people is what will speak for the government concerning tax payment. The peoples willingness is greatly influenced by their perception of the government’s delivery.


The major aim of the study is to examine the legal and international challenge of voluntary tax compliance with company income tax in Nigeria. Other general objectives of the study are;

To examine the level of company income tax voluntary compliance in Nigeria.
To assess the major implication of company income tax compliance in Nigeria.
To determine the impact of voluntary tax compliance on national development.
 To study the factors that influence voluntary tax compliance in Nigeria.
To recommend ways of improving voluntary tax compliance of company income tax.


What is the level of company income tax voluntary compliance in Nigeria?
What is the major implication of company income tax compliance in Nigeria?
What is the impact of voluntary tax compliance on national development?
 What are the factors that influence voluntary tax compliance in Nigeria?
What are the ways of improving voluntary tax compliance of company income tax?


This study will help the following;

Nigeria Board of Internal Revenue in administering positive responsibilities in other to raise revenue level through personal income taxation and conducting other tax duties.
 For policy makers to adopt appropriate policy on tax personal income tax and sanctions against violation or evasion of taxes by individuals, groups or companies.
 It will also help the officers of the Board of Internal Revenue to adopt new strategies in ensuring compliance of individuals, groups and companies in fulfilling their responsibilities as citizens of the country.
Theoretically, it will help in the education of the management, administrators and tax officers on the need for continuous tax assessment towards increasing the revenue base of the government.

This study will provide information to readers, especially those involved in financial administration to gain knowledge on the administration of personal income taxation.


This study is on the legal and international challenge of voluntary tax compliance with company income tax in Nigeria using selected companies in Lagos state as a case study.


The method of approach that would be employed in this write-up will be based mainly on the use of secondary data. The secondary data will include textbooks written by renowned authors and scholars who by their wide knowledge and grasp of the subject and other ancillary legal precepts are experts in the field.


<p>In Nigeria, diminutive economic growth and national relapse can be traced to the practice of multiple taxes, tax evasion and avoidance as characterized by the Nigerian tax system. No doubt, they have become phenomena of significant concern among stakeholders. Whereas, Odusola (2006) noted that, Nigeria being a federal state has its fiscal operations in conformity to the same federal principle, a fact that has serious implications on how the tax system is managed. Ifeuko (2008) on the other hand observed that the problem with the Nigerian tax system is majorly the absence of a national policy document that defines who has the right to collect tax and what amount collectible by each tier of government. Consequently, for Odusola (2006), the present tax system is characterized as lopsided and unnecessarily complex, distortionary and largely inequitable. Contentiously, the arguments for, and against the practice of multiple tax system in Nigeria have been fierce among scholars, tax practitioners and policy makers. Ensuing from these irreconcilable conflicts among the tiers of government is a negative impact on the taxpayers&rsquo; attitude and compliance towards civic obligations, leading to an increasing rate of tax evasion and avoidance. For instance, CITN (2010) noted that in Nigeria presently, as in other developing countries, income tax administration is characterized by low level of compliance, and despite Nigeria & rsquo;s human and natural endowment as well as economic potentiality, the country has continued to record one of the lowest tax compliance levels in Africa. Whereas substantial research efforts have been devoted in the area of taxation and taxpayers & rsquo; compliance in the developed economies, not much have been done in third world nations. Just like Margaret and Chris (2009) noted, policy makers and revenue authorities in developing economies like that of Nigeria face quite different challenges and constraints such as limited administrative resources and expertise, weak tax administration, widespread evasion, corruption and coercion, low taxpayer literacy and morale, and arrogance towards the government. Similarly, Alabede et al. (2010) noted that all efforts through various tax reforms undertaken by the government to induce taxpayers & rsquo; compliance and to increase tax revenue over the years have remained futile. Empirical evidences have shown that contributions of income taxes to total revenue have remained consistently low and shrinking (Asabe, 2005). Although, this dwindling compliance among taxpayers ensued from a multitude of factors, notwithstanding, the perception of taxpayers towards multiple tax charges is fundamental among other factors (Abimbola, 2008). Still, the concept of taxation has been a concern of global significance as it affects every economy irrespective of national differences. Whereas for Hurwich (2001), tax administration is an important aspect of using tax policy to achieving the goal of efficient resources allocation through the provision of adequate infrastructures, Fisher and Walpole (2005) maintained that tax administration affects everyone, and both the tax authorities and taxpayers want an effective and efficient tax system. Therefore, an efficient and robust tax system is the cornerstone to attaining the Nigeria&rsquo;s ambition of becoming one of the most rapidly developing economies of the world by 2020 (Salami, 2011; Adedeji and Oboh, 2012). To achieve this, series of researches have been ongoing, yet with a disconcerted effort among the various committees set up by the Government in resolving the tax controversy among the tiers of Government (Odusola, 2006).


Out of all the problems confronting tax administration in Nigeria, the major problem is how to ensure voluntary compliance on the part of the tax payers. The problem of the tax is poor performance of most state governments is provision of basic amenities for the tax payers in the state. Lack of confidence and mutual distrust in government represented here by the tax man, gave rise to voluntary compliance difficulties. Tax laws in Nigeria are complex and difficult for the common taxpayer to understand, and some cases are problematic even for literate official. In addition to lack of understanding, many taxpayers are unaware of the existence of certain tax. This couple with the lack of information, laziness of the tax official, uncooperative taxpayers and the habit of &lsquo;quick &ndash;fix&rsquo; solutions-encourages the use of the best judgement approach. This may be a manifestation of the poor tax education and weak fulfillment ii by tax authorities of their responsibilities with regard to public awareness. Ocheoha (2000) asserts that tax is a commodity nobody will want to buy if buyers are given the opportunity of choice because tax is an imposition. He explains that government imposes taxes primarily to raise the revenue required to cover the cost of general administration and defense. He contend that the cost of general administration includes paying of personnel emoluments, salaries, wages of leaders or those in authority, their aides, as well as the salaries of civil servants, police and military personnel. Today the purposes of taxation have assumed a wider dimension hence the government uses it as a veritable tool of administration. Therefore, the status and standing of taxation as a subject worthy of study cannot be overemphasized. Abudulrazaq (2002) asserts that the way Nigerian taxation should be studied and practiced remains a broad and demanding one. He suggested there must be technical competence with a positive group of primary sources that the competence can be tested in many ways ii regarding form, elementary computation to planning transactions. Tax is imposed by those in authority for a variety of reasons and charges. Musgrave (2004) posits that taxes and charges are withdrawn from the private sector without leaving the government with liability to the payee. However, tax is a compulsory imposition, whereas charges and borrowing involve voluntary transactions. In view of the above, this study will attempt to answer the following questions which form the bedrock of the problems raised by the study. What classes of people are liable to which type of taxation and what is the level of their compliance to the personal income tax in the state?. What is taxation, and what purposes does taxation serve? ii How have multiplicity and duplication of taxes, levies by the other levels of government made the administration of personal income tax by Nigeria difficult? High level incidence of corruption in the administration of personal income taxation gave rise to increased tax evasion, avoidance and ineffective and inefficient personal income tax administration in Nigeria. Noticeable inefficacy as evidenced in the increasing number of tax defaulters, evasion and avoidance are attributable to corruption and other vices in the administration of personal income tax in Nigeria.