ABSTRACT
This
term paper is written to give an insight into the effect of TAXATION in Nigeria
Prospects for Reform.
In
realization of this purpose which was to examine the effect of taxation in Nigeria
prospects for reform, the term paper provides clearly a complete coverage of
the study.
Chapter
one dealt with the introduction of the subject matter. Chapter two examines the
general principles of Taxation in Nigeria prospects for reform. While
chapter three is the summary and recommendation of the subject matter.
The
term paper will be found useful over its encouragement to investment and
reviews to the extent taxation in Nigeria prospects for reform effect
investment.
According
to Toye (1978) the practice to operate science which gives tax concessions has
widely spread among government of developing countries. Toye went further to
say that these subside from public expenditure is being given to newly
established firms or only firms starting new activities. This is to include the
private sector to invest and participate in the taxation in Nigeria prospects for reform.
TABLE
OF CONTENT
TITLE
PAGE II
APPROVAL PAGE III
DEDICATION IV
ACKNOWLEDGEMENT V
ABSTRACT VI
TABLE OF CONTENT VII
CHAPTER ONE
1.0 INTRODUCTION 1
1.1 BACKGROUND OF THE STUDY 2
1.2 STATEMENT
OF THE RESEARCH PROBLEM3
1.3 OBJECTIVE/SIGNIFICANCE
OF THE STUDY4
1.4 SCOPE
AND LIMITATIONS OF THE STUDY5
CHAPTER TWO
2.0 GENERAL
PRINCIPLES OF TAXATION IN NIGERIA
PROSPECTS
FOR REFORM 8
2.1 DEFINITION 9
2.2 DIRECT
AND INDIRECT TAXES 9
2.3 JUSTIFICATION
OF TAXATION OF
CUSTOMS & PORT REFORM 10
2.4 ESSENTIAL
CANNONS OF GOOD TAX SYSTEM11
2.5 TAX
ADMINISTRATION IN NIGERIA 12
2.6 OBJECTIVES
OF INCOME TAX
MANAGEMENT
AC (ITMA) 15
2.7 POWERS
AND DUTIES OF THE JOINT TAX BOARD15
2.8 EMPLOYMENT
OF INCOME EXEMPTED 17
2.9 DIVIDEND,
INTEREST OR DISCOUNT 17
3.0 RELIEF
AND ALLOWANCE 20
PERSONAL
ALLOWANCE 20
CHARGEABLE
INCOME 21
MARRIAGE
ALLOWANCE 21
CHILD
ALLOWANCE 21
DEPENDENT
RELATIVE ALLOWANCE 21
LIFE
ASSURANCE. 22
3.1 EARNED INCOME 22
3.2 FEDERAL
COLLECTED REVENUE FOR REFORM23
3.3 REVIEW
OF VALUE ADDED TAX (VAT) 23
DISTRIBUTION FORMULA 24
3.4 TAXATION
TO BE USED AS DEVELOPMENT TOOL30
CHAPTER THREE
SUMMARY 30
RECOMMENDATION 30
CONCLUSION 31
BIBLIOGRAPHY. 33
CHAPTER
ONE
1.0 INTRODUCTION
Taxation is a major source of revenue to
the government. Revenue could also accrue to the government through other
sources such as foreign gifts, grants, income from investments and
international trade. The above mentioned sources of revenue listed above are unreliable
source of generating revenue to the government. However, taxation could be as one
of the major source of generating revenue.
Tax
as a levy imposed by the government against the income, profit or wealth of the
individual, partnership and corporate organisation. Taxation is divided into
various types such as income tax, corporate tone, company tax, capital gains
tax, capital transfer tax etc.
Taxation
in Nigeria
prospects for reform is levied on the authority of the federal government
income tax management act 1961 (ITMA) and subsequent amendments including the
financial miscellaneous taxation provision, degree 1992 and the finance (miscellaneous
provision) degree 1993.
1.1 BACKGROUND
Nigeria
taxation prospects for reform is an assessment imposed by the states and the
federal governments to enable them provide services for Nigerian citizens. The
present day taxation prospects for reform in administration is guided by the
following act and decrees:
i.
Income time management act (ITMA) 1961
referred to as the 1961 act. This governs the taxation of individuals,
trustees, executors, partnerships, communities and families. The act was
amended by the finance (miscellaneous taxation provision) decree 1985, 1987,
1992, 1993, 1994 and 1996.
ii.
Company income tax act (CITA) 1979 referred
to as the 1979 act which regulates the taxation of registered companies. This
act has also suffered some amendments.
iii.
Petroleum profit tax act (PPTA) 1959 as
amended up to 1979 referred to as PPTA 1959 as amended. This act regulates the
assessment and collection of petroleum in tax payable by entities that engage
in the extraction and sale of petroleum oil in Nigeria.
iv.
Capital gains tax decree (CGTD) 1967 which
was introduced by decree 44 of 1967. this decree takes care of gains accruing
to any person on or after 1st
April 1967 on the disposal of fixed assets.
1.2 STATEMENT
OF THE RESEARCH PROBLEM
The
Nigeria Taxation prospects in Nigeria
for reform is affected with different taxation problems. Such as:
1. it may act
as dis-incentive to work. That is, tax on management earning.
2. taxation may
direct economic resources depending on the elasticity of demand for the
relevant product. Example, if there is a purchase tax on butter and price of
butter goes up, people may like to purchase margarine and hence resources may
be diverted to the production of margarine.
3. taxation
could encourage inflation. If taxes on essential commodities increase, there
will be demand for high wages and this could lead to higher prices.
4. Taxation
may deter enterprise from increasing productivity especially if a business man
knows that the more money he earns the more tax he pays.
1.3
OBJECTIVE
There is variety of
reasons for imposing tax. The primary one is to provide the government with the
revenue it needs to carry out its functions. Other objectives of taxation is as
follows:
1.
To encourage saving and regulate expenditure
eg. Tax on luxuries.
2.
To provide free –social services like health
and education etc.
3.
To assist in economic planning eg. Encourage
exports or simulate specific industries.
4.
to achieve desire social ends e.g discourage
excessive smoking and drinking
5.
to protect home industries by imposing discriminatory
tariffs.
6.
to provide incentives for industry and
investment e.g granting of
i.
Allowances for research work and
ii.
Investment of allowances for capital
investment
1.4 SCOPE
The scope of the
subject matter being “Taxation in Nigeria prospects for taxation in Nigeria
prospects for reform could be seen as an act of direct economic resources
depending on the elasticity of demand for the relevant public. Example, if
there is a purchase tax on butter and price of butter goes up, people may like
to purchase margarine and hence resources may be diverted to the production of margarine.
However,
other scopes of taxation in Nigeria
prosect for reform is as follows:
i.
Taxation may deter enterprise from increasing
productivity especially if a business man knows that the more money he earns,
the more tax he pays.
ii.
Taxation could encourage inflation. If taxes
on essential commodities increase, there will be demand for high wages and this
could lead to higher prices. To crown it all, the major scope of taxation in Nigeria
prospects for reform, is to:
i.
Protect infant industries
ii.
Reduce in equity of income
iii.
Raise revenue to meet the cost of general
administration and social services provided by the state.
iv.
Check the consumption of commodities regarded
as harmful.
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