ELECTRONIC TAX SYSTEM, TAX COMPLIANCE AND REVENUE COLLECTION EFFICIENCY
Abstract
Survey population comprised of tax officials, small business employees, and the self-employed. Data were collected through the structured questionnaires used. We used regression and correlation to analyze the data obtained from the questionnaire. Findings include:
The e-tax system has a positive and significant effect on self-employed tax compliance. There is a correlation between perceived ease of use and the e-tax system. The study recommends promoting the e-tax system in the state as it will significantly contribute to the state’s revenue generation.
chapter One
Foreword
1.1 Research background
Taxes are an important source of government revenue. Taxes can be defined in various ways. Anyanwu (1997) defines taxation as the forced remittance of payments (or goods or services in some cases) from individuals, institutions or groups to the state. According to Ogbonna and Appah (2012), taxes are “an important source of revenue for governments around the world.” According to Chris and Elizabeth (2001), taxes have three basic characteristics. That is, a compulsory tax imposed by a government or local authority to promote social justice for public purposes. Taxation is the mechanism or process by which a society, community, or group of individuals contributes an agreed amount of money that is important to settlement, development, and public governance (Ogundele, 1999). Taxes are essential fees that governments collect from citizens and business institutions to provide public spending (Nightingale, 1997). Taxation as a fiscal instrument can be used to enhance a nation’s development process and its economic activity, thereby improving the overall wealth and economic well-being of the population as a whole (Anyaduba, 1999). Taxation is both a tool for social development and a means of redistributing the rewards of development (Oladiran, 2009).
When taxpayers pay their taxes, governments have a responsibility to be accountable to their citizens and to make budget decisions accessible and transparent. In developing countries like Nigeria, governments face challenges and problems with revenue collection (i.e. tax collection), resulting in less money being collected by the government. According to the World Bank Economic Report on Nigeria, released May 1, 2013, 95% of projected government spending is dependent on projected oil revenues based on current world oil prices. I understand. The report also recommends that by improving the domestic tax system, the federal government can increase domestic revenues and provide a plan to financially back up the economy if oil prices fall (The World Bank 2013).
As the use of information technology expands, the electronic tax payment system is attracting worldwide attention and has an impact on tax administration. Nisar (2013) argued that current problems in public taxation emphasize the need to develop tax assessment and collection systems that include Internet services. An electronic tax payment system is therefore an online platform that enables taxpayers to access all services provided by tax authorities via the Internet, such as: E-filing is the process of filing tax documents or returns over the Internet, usually without the need to file a paper return.
In the United States, the adoption of electronic tax administration, including electronic tax filing (e-filing), has affected the largest number of citizens.
Electronic Tax Exemption Certificate (E-TCC) processing:
Taxpayers can apply for a system-generated TCC online. You can still collect paper copies, but his system-generated TCC is just as useful as the paper copies. In other words, E-TCC is a platform that issues the taxpayer’s TCC.
Taxpayer Identification Number (TIN) Validation:
An external party can enter the taxpayer’s TIN into the Integrated Tax Administration System & # 40; ITAS & # 41; inspection.
Automatically impose fines and interest on late filing:
The system is designed to automatically calculate and impose interest and penalties for late filing or payment of tax returns. Electronic tax payment:
As of March 2015, taxpayers can pay their taxes online from their corporate bank account. This application is used in conjunction with the Nigerian interbank payment system (NIBBS). are hosted on the respective commercial bank’s internet banking platform. This process requires a TIN, a unique document number generated by an electronic filing platform, and the required internet banking authorization. (PWC Nigeria, 2015)
Tax compliance indicates how well a taxpayer complies with its country’s tax laws. This includes paying taxes, preparing tax returns and submitting them to tax authorities in the required format and in a timely manner. Tax compliance issues are a lively topic in the Nigerian tax community. Most citizens believe their government is not providing us with the basic amenities we need, so why pay taxes? This is the most common response from tax-evading citizens. . Tax evasion cannot be completely eliminated, but it can be managed by tax authorities. A better definition of compliance may include the level of compliance with tax laws and governments that can be achieved without direct threats or the actual use of enforcement action. Tax compliance can be viewed in terms of tax avoidance and tax evasion. The two differ in terms of legality, tax evasion is legal, but tax evasion is illegal. Compliance may therefore be better defined in terms of adhering to national tax laws (James, Murphy, and Reinhart 2005).
1.2 Problem Description
Electronic tax systems remain a major problem around the world, especially in developing countries like Nigeria. Electronic tax systems were introduced by the Federal Inland Revenue Service in 2013 to improve tax collection, make tax administration more effective, reduce tax evasion, serve taxpayers anytime and anywhere, and improve tax compliance. , reduce the cost of the compliance process and . The first need of any modern government is to generate sufficient revenue, the backbone of the nation. Taxation is therefore one of the most important sources of revenue for the state (Ogbonna and Appah, 2012).
Electronic filing offers many advantages for tax authorities. For tax authorities, electronic filing minimizes the workload and operational costs associated with filing tax returns online. It also reduces the cost of filing, storing and processing tax returns. Despite these advantages associated with e-filing, tax authorities face some major challenges in adopting e-filing systems. One of the challenges is public perception of electronic filing systems. After using e-services through the Internet, the public may find the e-services system simple and convenient. Because it is offered online, citizens cannot interact directly with tax officials or see or touch tax returns, so the electronic filing service system offered may not function as expected. factor of the problem
1.3 Purpose of the survey
The general purpose of this study is to examine the impact of the use and implementation of e-tax systems on tax compliance for self-employed taxpayers and small business owners.
This research was guided by the following specific objectives:
1. Examine the impact of the e-tax system on self-employed tax compliance.
2. Examine the impact of the e-tax system on small business employee tax compliance. 3. Examine the relationship between ease of use and electronic control systems.
4. Determination of the effect of the electronic tax system on the efficiency of tax collection by tax authorities.
1.4 Research question
In order to achieve the above goals, the following research subjects have been formulated as follows.
1. To what extent will the e-tax system affect self-employed tax honesty?
2. To what extent will the e-tax system affect the tax compliance of small business employees?
3. What is the relationship between e-control systems and usability? 4. To what extent will the electronic tax system affect the tax collection efficiency of fiscal administration?
1.5 Research hypothesis
HO1:
The e-tax system will not affect the tax integrity of the self-employed.
H02:
The e-tax system has no impact on tax compliance for SME employees.
HO3:
There is no correlation between ease of use and electronic control system. HO4:
Electronic tax payment systems do not affect the efficiency of tax collection by tax authorities.
1.6 Importance of research
The Lagos State government relies heavily on taxes to fund infrastructure spending and ongoing development spending. Increases or decreases in taxpayer compliance have a direct impact on Nigeria’s economy as a country.
Tax Offices and Other State Agencies:
This study will likely reveal the pros and cons associated with the implementation of the new technology, as well as the benefits for small taxpayers’ tax compliance, and will be useful to the knowledge of other government agencies planning to implement electronic tax systems. will enrich The study will also educate tax authorities on how the e-tax system has significantly improved tax compliance for SME and self-employed taxpayers through the use of the platform or other methods. student:
It is also useful for students and researchers who want to understand the practical aspects of taxation. Helps students to know and evaluate real government e-tax systems. This study also adds to existing literature knowledge and may form the basis for further research in the field of electronic tax systems and tax compliance in Nigeria.
International analyst:
The study is relevant to international analysts interested in Lagos State’s electronic tax system and aims to improve tax compliance and Describe how it affected the effectiveness of this system.
1.7 Research scope and limitations
The e-tax system is the transmission of tax information directly to tax authorities via the Internet (Edwards-Dowe, we, 2008). The e-tax system will effectively impact the economy and improve the level of tax compliance and income generation for taxpayers. This is because it is practical, time-saving and cost-effective for both tax authorities and taxpayers.
Lagos State was chosen as a case study for this study because Lagos State has a high population density of over 21 million people (World Population Review 2016) and is known as the city that never sleeps, which speaks to its large population. . A taxable person who can be registered in the e-tax system. FIRS He launched an integrated tax management system in Nigeria in 2013, providing taxpayers with services such as her e-TCC, electronic filing, electronic payments and electronic registration. Lagos State’s internal revenue increased from an average of about 600 million naira per month in 1999 to about 20.5 billion naira in 2013, making Lagos state the highest IGR (internal revenue) in Nigeria and the least dependent on revenue. became one of the states. Federal accounts (LIRS, 2016).
Obtaining sufficient secondary data has been difficult and limited, as little research has been done on electronic control systems. Tax officials, the self-employed, and small business employees who had to return to work rushed to fill out questionnaires, affecting the quality of responses. Time was of the essence in this study, and this had implications for the researchers as well. The tax office also placed particular importance on the number of questionnaires brought into the workplace.
1,8 OPERATIONALIZATION OF VARIABLES
This research is based on two variables, Independent Variable (E-Tax System) and Dependent Variable (Tax Revenue). The dependent variable is tax revenue which is measured using the following parameters:
Y1= Tax Compliance (TC)
Y2= Revenue Collection Efficiency (RCE)
X= E-Tax System (ETS)
Y1= y1 y2 y3
Y2= y4
Y1= Tax Compliance among Self-employed Individuals (TCSE)
Y2= Tax Compliance among SME Employees (TCSME)
Y3 = Perceived Ease of Use (PEOU)
Y4= Tax Revenue Collection Efficiency (TRCE)
X= Electronic Tax Payment (ETP)
TCSE= f (ETS) —————————————————————–EQUATION 1
TCSME= f (ETS) —————————————————————EQUATION 2
PEOU= f (ETS) —————————————————————–EQUATION 3
TRCE= f (ETS) ——————————————————————EQUATION 4
The relationship between E-Tax System, Tax compliance and Revenue Collection Efficiency is expressed by the following equations:
TC, RCE= f (ETS)
1.9 DEFINITION OF TERMS
1. TAX:
This is a compulsory contribution to state revenue, levied by the government on workers’ income and business profits or added to the cost of some goods, services and transaction.
2. E-TAX SYSTEM:
This is an online platform whereby the taxpayer is able to access through internet all the services offered by a financial authority such as the registration for personal identification number, filing of returns and application for compliance certificate. 3. Tax compliance:
This is the degree to which the taxpayer complies with the tax laws of their home country. This includes paying taxes, preparing tax returns and filing them in a timely manner with tax authorities.
4. Small business:
The full meaning of small business is small business. These are independent companies with no subsidiaries and less than a certain number of employees. A medium business has fewer than 250 employees, a small business has fewer than 50 employees, and a small business has fewer than 10 employees.
5. Self-employed:
A person who works for himself instead of working for an employer who pays him a salary or wage is self-employed.
6. Electronic tax forms:
This is the process of submitting a tax document or tax return over the internet and usually does not need to be submitted.