The tax policy enumerates the monetary charges imposed by government on individuals, companies, transactions or properties for the purpose of revenue. In other words, taxation policy has some nonrevenue objectives. The study used year 2007 as the cutoff period because of the challenges of data paucity. Project topic on the impact of taxation on small scale. The government will however be able to achieve the desired goal if some controls can be maintained on the currency. Wider research paper 200603 tax policy reforms in nigeria. With the drop of the price of brent crude by more than half since peaking in june 2014, the ability of the fgn, sgs and lgs to deliver on their election promises is greatly undermined. The primary objective of this paper is to prepare a. The relationship between indirect taxation and economic growth has been examined severally by different researchers. Fundamental principles of taxation this chapter discusses the overarching principles of tax policy that have traditionally guided the development of tax systems. The nigerian tax system is lopsided, and dominated by oil revenue. The tax system in nigeria is made up of tax policy and tax laws, stratified into tax assessment, tax collection and tax administration. With the decline in oil revenue, focus has shifted to taxation as a source of income. This paper investigates the impact of taxation on economic growth in south africa.
Value added tax in nigeria how to calculate vatable. The at a glance series seeks to enhance the communication of monetary and financial policies and enrich the banks financial literacy initiative. This growth was largely driven by prudent macroeconomic management following the implementation of favourable fiscal and monetary policies amidst the declining oil prices at the time. The main goal behind these changes was to create a more efficient and effective way of administering and collecting taxes. Taxation, imposition of compulsory levies on individuals or entities by governments. The current taxation system in nigeria has achieved its modern form through various changes in the tax laws and policies. National tax policy chartered institute of taxation of nigeria. The study adopted multistage sampling techniques to select the sample size of nine local government areas that have duly registered small and medium enterprises smes under small and. Under the current law in nigeria, taxation is enforced by three tiers of government i. A closer examination of some of the factors or reasons for the uncooperative attitude of people towards taxation reveals that the onus is on the complications and complexity of tax policies and administration in the country. The ntp is a document which sets broad parameters for taxation and ancillary matters connected with taxation in nigeria. Apart from being a major source of revenue for government to provide goods and services needed by the people, tax policies, can and do stimulate economic growth and job creation through its impact on investment and capital formation in. New forms of taxation will be developed, and they will be able to change the face of nigeria.
The impact of tax policy on economic growth in nigeria s. Government, tax administrators, practitioners and academics alike. Nigeria has maintained its impressive growth over the past decade with an estimated 6. Obviously, everything about the nigerian taxation cannot be covered in this article, so try to click the links provided on certain text to get a wider scope and explanation. Most times, the resistance to taxation is so fierce that it could lead to social unrest. Anyanwu 1997 defined taxation as a compulsory transfer or payment or occasionally of goods and services from private individuals, institutions or groups to the government.
Elimination of double taxation by addressing provisions that make double taxation a fait. Taxation, tax law, tax policy, tax administration, fiscal federalism, nigeria. Furthermore, to avail of the information necessary to bring people in the informal. Under companies income tax act you have to pay companies income tax if you are a resident or nonresident company incorporated in nigeria. The policy will now be endorsed by the national economic council to recognize the federal system of government given the application of the policy to all tiers of.
Data were generated through primary sources and the use of multiple regression analysis was employed. Impact of nigerian tax policies on the economy and small businesses in nigeria abstract small and medium enterprises play a very important role in development of the nigerian economy. National tax policy for nigeria final draft submitted to the federal executive council final draft to federal executive council 6 chapter two. The objective of this study is to investigate the impact of taxation on economic development of nigeria proxy by the gross domestic product gdp. A means by which governments finance their expenditure by imposing charges on citizens and corporate entities. The magnitude of government surplus or deficit is probably the single most important statistic measuring the impact of government fiscal policy on an. Impact of tax administration on government revenue in a. Central bank of nigerias monetary and credit policy guidelines and money supply do have impact on the level of outputs.
The tax policy enumerates the monetary charges imposed by government on individuals, companies, transactions or properties for the purpose of revenue generation. The importance, effect, causes, relationship, comparison, history, role, solutions are discussed. The institute in furtherance of its statutory responsibility was among the first stakeholders to forward its position papers on the 8 tax bills and participated actively during the public hearing. Apr 20, 2017 nigeria has a new national tax policy the federal executive council, the highest executive decision making organ in nigeria just approved a new national tax policy for the country. The department is grateful for the enormous contribution, time and efforts committed. Making up about 97% of the entire economy, they serve as a source of employment generation, innovation, competition, economic dynamism which ultimately lead to poverty alleviation and national growth. The importance, how to, effect causes relationship, comparison, history, role, solutions are discussed. Conceptual background tax revenue mobilization as a source for financing development activities in nigeria has been a. The realities of taxation of taxation in the informal sector. For example, reduction in taxable personal or household income by the amount paid as interest on home mortgage loans results in greater. The empirical results confirm that there is a negative relationship between taxes and economic growth in south africa.
It then provides an overview of the principles underlying corporate income tax, focusing primarily on the taxation of crossborder income both. Best accounting software for small business owners in nigeria. A valueadded tax vat, known in some countries as a goods and services tax gst, is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production, which is usually implemented as a destinationbased tax, where the tax rate is based on the location of the customer. Section 1 1 of the taxes and levies approved list for collection act 1 provides that. Taxation, revenue allocation and fiscal federalism core. Impact of multiple taxation on small and medium scale.
In this context, competitiveness is defined as the set of institutions, policies, and. An essay on the effects of taxation on the corporate financial policy george contos, internal revenue service the taxation of corporate profits in the united states has been one of the most widely discussed issues in the area of public finance. Governments use taxation to encourage or discourage certain economic decisions. Taxation is undoubtedly a veritable instrument for national development. The national tax policy seeks to provide a set of guidelines, rules and modus operandi that would regulate nigeria s tax system and provide a basis for tax legislation and tax administration in nigeria.
Abstract this research is proposed to investigate taxation as a fiscal policy tool on its use in solving economic problem such as inflation reduction, harmonization of policies on tax as it relates to government policies and conflict in objectives, inequality, multiple tax problem etc. Fiscalmonetary policy and economic growth in nigeria. Abstract this research is proposed to investigate taxation as a fiscal policy tool on its use in solving economic problem such as inflation reduction, harmonization of policies on tax as it relates to government policies and conflict in. Tax administration involves the care and management of the phenomenon of taxation. Even after some tax policies the tax authority has put in place over the few years such as the e payment scheme, tax identification number. The study only torches on the challenges tax policies in nigeria and how it can affect self employed business men and women, traders, and other forms of sole proprietorship businesses. Chelliah 1989 observed that an increase in indirect taxation compared to direct taxation reduces economic growth more than direct taxation does. The national tax policy is a document that provides all the necessary information relating to taxation. The taxation in nigeria has come a long way to the point where we now have the present form of tax policies. Nigeria is not enjoying price stability in the least. The study employed survey research design with the population of 18 local government areas.
Taxation and tax policy as government strategy tools for. By taiwo oyedele nigerias ranking has declined 3 places from 124 to 127 out of 8 countries in the latest global competitiveness index by the world economic forum. Taxation in nigeria and history of taxation in nigeria a tax in nigeria is a compulsory levy imposed by the federal government of nigeria on individuals and corporate entities in respective of return of service expected from the government. Tax policies and entrepreneurship sustainability in ondo.
Table 1 nigerias federal, state and local tax jurisdiction and assignment. Truly speaking, in the modern world, taxation is used as an instrument of economic policy. Taxation is an integral part of countries development policies, interwoven with numerous other areas, from good governance and formalising the economy, to spurring growth through, for example, promoting small and medium sized enterprises smes and. The modern view of taxation stems from the common premises that no one can be an island for him or herself.
Burning issues in the nigeria tax system and tax reforms. A revised national tax policy ntp was approved by the federal executive council on february 1, 2017. Get free research paper on impact of multiple taxation on small and medium scale businesses in nigeria project topics and materials in nigeria. An essay on the effects of taxation on the corporate. The commission has always been an advocate of closer coordination on tax issues, common measures against tax avoidance and greater collective focus on growthfriendly tax policies. However, years of negligence and adverse policies have led to the underutilization of these resources economic watch, 2010, and this has contributed to the increasing unemployment rate in nigeria. This paper exposes the injustices in the taxation of the informal sector with a view to create a safe space for the redress of these injustices either at the policy level or at the execution level. The impact of taxation on economic growth in south africa.
Taxation as an instrument of fiscal policy in nigeria. Taxation of foreign companies operating in nigeria matters. The study adopted multistage sampling techniques to select the sample size of nine local government areas that have duly registered small and medium enterprises smes under small and mediumscale. Pdf nigeria is governed by a federal system, hence its fiscal operations also adhere to the same principle, a fact which has serious implications on.
Nigeria tax system is historical odusola, 2006 dates back to 1904 when the personal income tax was introduced in northern nigeria before the amalgamation, through the native revenue ordinances 1917 the west, the direct taxation ordinance no. Therefore, this research work seeks to know how taxation is being used as a tool of this very important policy and the impact such has made in nigeria. The pkf worldwide tax guide 20 wwtg is an annual publication that provides an overview of the taxation and business regulation regimes of the worlds most significant trading countries. The effect of poor implementation of tax policies on. A sample size of 80 respondents, determined by the yaro yamens formula, was selected. Tax identification number tin in nigeria, every citizen of nigeria working with the government, the private sector or owns. An overview of national tax policy and administration in. Tax and taxation in nigeria europeanamerican journals. This study is on the effects of multiple taxation on the performance of small and medium scale enterprises smes. It was recommended that the nigerian tax system should be simple easy to understand by all, certain its laws and administration must be consistent and clear stakeholders must understand the basis of its imposition. Apart from being a major source of revenue for government to provide goods and services needed by the people, tax policies, can and do stimulate economic growth and job creation through its impact on investment and capital formation in the economy. The impact of tax policy on economic growth in nigeria.
Thereafter, the institute, based on its invaluable contributions to. Nigerians under the law are to pay 25% of their total worldwide income while foreign individuals are to pay 25% of the profit made in nigeria only. This is approved for students in accountancy, business, computer science, economics, engineering, arts. In nigeria, nobody can dispute the fact that though this taxes are been collected, they are. The realities of taxation of taxation in the informal.
The primary purpose of taxation is to raise revenue to meet huge public expenditure. The role of taxation in promoting economic growth in nigeria is not fully felt, and optimal tax is not been realized that can engine economic growth primarily because of its poor administration. Taxation in nigeria understanding nigerian tax system. Taxes are levied in almost every country of the world, primarily to raise revenue for government expenditures, although they serve other purposes as well. As of 2002, about 40 different taxes and levies are shared by all three levels of government. Principles of taxation are those formal guidelines which are widely accepted andor discussed and should be considered whenever specific laws are proposed, discussed and implemented. Tax evasion, double taxation, tax regime introduction. Effects of multiple taxation on the performance of small and. Unfortunately, we are far behind on tax law reform in nigeria as the last time any business tax legislation was enacted or. The study examines the effect of tax policies on the survival of entrepreneurship in ondo state, nigeria.
It is aimed at creating a tax system that will contribute to the wellbeing of all nigerians and taxes which are collected by. It requires clear perception of fiscal terms and concepts as well as. Impact of nigerian tax policies on the economy and small. Over the years, small and medium scale enterprises smes have been an avenue of job creation and the empowerment of nigerian citizens, providing about 50% of all jobs in nigeria and also for local capital formation.
Still, they will stand on the shoulders of the previous taxation policies. The national tax policy provides the fundamental guidelines for the orderly development of the nigeria tax system. Effects of multiple taxation on the performance of small. Taxation of foreign companies operating in nigeria matters arising from deemed profit basis of taxation and the way forward for a government seeking to simplify the tax system and improve tax compliance, it is conventional wisdom that the harder we make tax compliance, the more we provide the incentive for noncompliance and outright evasion. The chartered institute of taxation of nigeria was not left out in this quest. Fiscal policies in nigeria are one of the policies used in achieving some of the economic objectives set by the government. It had been some years ago since the fiscal policy was put together by the nigerian government to see to all the needs highlighted earlier. An overview of national tax policy and administration in nigeria. Nigeria depends on crude exports for about 70 per cent of government revenue and more than 90 percent of foreign exchange. The ttest was used to establish sufficient evidence that the. A revised national tax policy ntp was approved by the. This means that in the modern society, societal members are. Get free research paper on transfer pricing and business profit taxation of multinational companies in nigeria our project topics and materials are suitable for students in nigeria with case studies in pdf, doc.
Nigeria is endowed with diverse and huge resources both human and material. The national tax policy is an initiative of the federal government of nigeria which is being. Under current nigerian law, taxation is enforced by the 3 tiers of government, i. Few, ifany have examined this line of research in nigeria. Yearly data for south africa for the period 1981 2016 was used to develop the autoregressive distribution lag ardl approach.
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