Examination Of The Effectiveness Of Tax Identification Number (Tin) In Combating Tax Evasion In Nigeria

Examination Of The Effectiveness Of Tax Identification Number (Tin) In Combating Tax Evasion In Nigeria

1.1 Study’s Background

Fundamental elements of generating revenue for the government are taxes and taxation systems. Taxes, according to Brautigam (2008), fund the ability of states to achieve their objectives. The balance between accumulation and redistribution that gives states their social character is shaped by them, making them one of the key settings for the conduct of state-society relations. Therefore, taxes increase a government’s ability to provide security, meet fundamental necessities, or promote economic growth. They also increase a government’s legitimacy and consent, which helps to establish a consensual, accountable, and representative government. The way a tax system is implemented is an important one (Naiyeju, 2010). According to Bahi and Bird (2008), no tax is better than how it is administered, hence tax administration is very important. One of the main goals of tax administration is to ensure that all taxpayers, regardless of type, comply with their tax duties to the greatest extent feasible. Unfortunately, tax administration is frequently inadequate and plagued by widespread fraud, corruption, and coercion in many nations.

According to Brautigani, Fjelftand, and Moore (2008), when total tax levels are low, significant portions of the informal economy completely bypass the tax system. A country’s tax structure frequently reflects both its societal values and the values of the ruling class (Ross, 2007). In order to establish a taxation system, a country must decide how the tax burden will be distributed and how the money raised from taxes will be used. These decisions represent the kind of community that the public or government wish to create in democratic countries like Nigeria where the people elect those responsible for designing the tax system. According to Parkin (2006), in nations where the public does not have a substantial degree of influence on the taxation system, that system may be more of a reflection on the values of those in power because governments use various types of taxes and alter the tax rates. This is done in order to redistribute resources among individuals or classes of the population who are engaged in taxable activities, such as enterprises, or to share the tax burden among them.

Every individual and corporate entity (i.e., taxable businesses that make a stable income) in Nigeria is assigned a 10 (ten) digit number known as a Taxpayer Identification Number (TIN). The Taxpayer Identification Number (TIN) is a platform that will standardize taxpayer identification and registration in Nigeria. It will also strengthen connections between the country’s various tax authorities, facilitate information sharing, and boost tax revenue for all levels of government (JTB Bulletin, 2011). The Joint Tax Board (JTB), in coordination with the Federal Inland Revenue Service (FIRS) and the 36 State Boards of Internal Revenue (SBIR), launched the Taxpayer Identification Number (TIN) program. It is an electronic system for registering taxpayers that would allow for the nationwide availability of taxpayer identification that is specific to each taxpayer. The Joint Tax Board (JTB) is tasked with ensuring coordination in the issuance and administration of Taxpayer Identification Numbers (TIN) to all taxable entities (as amended in section 8(q)(d) of the Personal Income Tax Act and section 8(q) of the Federal Inland Revenue Service establishment Act 2007). In order to facilitate efficient tax administration, it also establishes a national platform for taxpayer registration and identity number distribution. It is a well-known truth, nonetheless, that there have been problems with the identification, registration, and compliance of taxpayers in Nigeria’s tax office. The introduction of the Taxpayer Identification Number (TIN) program into our tax system is also linked to this underlying issue.

1.2 Definition of the Issue

The incorrect identification of tax bases by the three tiers of government in Nigeria is one of the issues with tax administration in that country. The decline in revenue accruable to the government has been attributed in part to the government’s failure to accurately track all income by people and business organizations entitled to pay tax (Ross, 2004). The Federal Republic of Nigeria’s constitution, as amended in 2010, lists the levies and taxes that can be applied to the three tiers of government. However, there have been a number of court cases involving specific tax bases, frequently involving the Federal and certain State governments. One such case involved the tax consumption between the Federal and Lagos State governments.

Therefore, it is necessary to determine how the taxpayer identification number’s implementation will affect internally produced revenue and tax payment in Lagos State.

1.3 The Study’s Objective.

The investigation of tax identification numbers’ efficacy in Nigeria’s Lagos state’s fight against tax evasion is the study’s primary goal.

1.4 Questions For Research.

What does Tax Identification Number mean?

Tax avoidance – what is it?

How well has Tax Identification worked to curb tax evasion?

?

What impact does Nigeria’s Tax Identification Number have on tax evasion?

1.5 Significance Of The Study

The results of this study will aid in addressing the impact of tax id numbers on tax evasion in Nigeria.

1.6 The Study’s Scope.

The study’s main objective is to assess how well Tax Identification Numbers work to prevent tax evasion in Nigeria’s Lagos state.

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