PROCEDURE, PROBLEM AND PROSPECTS OF PERSONAL INCOME TAX ADMINISTRATION IN NIGERIA

PROCEDURE, PROBLEM AND PROSPECTS OF PERSONAL INCOME TAX ADMINISTRATION IN NIGERIA

CHAPTER ONE

1.0       INTRODUCTION

There has been in existence various tax policies before enactment of the direct tax ordinance by Fredrick Lugard in 1946. However, the deficiency of the ordinance was dealt within 1950 through the introduction of basis principles of taxing income of individual other than Limited Liability Company.

The original purpose of taxation was to raise money to finance public expenditure since 1940 it has also became accepted that “taxation is one of the instrument used by government of the day on managing the economy” assessment of taxes on an individual in Nigeria purposely to achieve the set of objectives. It is also required to ascertain the effective and efficient execution of tax machinery set up by the Nigeria government to administer takes in Nigeria, these are Federal Board of Internal$ Revenue (F.B.I.R) and State Board of Internal Revenue (S.B.I.R). Proper personal income administration avoidance which is very common and rampant in Nigeria.

Personal income tax is charged on all income which accrues to people residing in Nigeria. It is also levied on all income arising within Nigeria no matter where the tax payer resides or his / her nationality.

The Oyo State Board of Internal Operates under both the Personal Income Tax Law of 1962 as amended by Personal Tax Law (Amendment) Edict 1962  (Edit Number (1) of 1977 and other federal tax law.

1.1       BACKGROUND OF THE STUDY

The background of taxation as a whole dated back as far a biblical days when the European Colonized were in government of Nigeria. The payment of the tax was made by money based on flat rate per head, later other forms of revenue like stamp duty, capital gain tax and betting business commission were also introduced business commission were also introduced and embraced by our people.

The decrees and acts that are in we as follows Finance (Miscellaneous taxation provision) No 2 decrees 1997. The Federal military government hereby decrees are as follows:

1. The personal income tax decrees 1993
2. The company’s income tax of 1999.
3. The petroleum profit act of 1959.
4. The value added tax decree 1993.

1.2       STATEMENT OF THE PROBLEM

In the previous year, the government machinery in tax administration encounters a lot of problems.

The problem of personal income tax nowadays is the sources of income. People have been engaging in avoidance and evasion of tax from time to time since the Board Inland Revenue Imposed taxation.

However, the major problem confronting tax, administration in Nigeria particularly the Internal Revenue Board of Oyo state is highlighted below:

1. Inability to provide adequate and appropriate guidelines and interpretation of legislation to the tax payer.
2. Problem faced by the tax collectors in order to know the exact amount of individual income from each source of income.
3. Inadequate orientation of the tax payer about the importance and usefulness of tax especially for people in rural area.
4. Problem of tax avoidance and evasion, which is yet t0 be cured by the state Internal Revenue Board.

PROCEDURE, PROBLEM AND PROSPECTS OF PERSONAL INCOME TAX ADMINISTRATION IN NIGERIA