Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Field Audit and Companies Income Tax Compliance in Federal Capital Territory, Nigeria: The Moderating Role of Tax Officers' Expertise

Ovie Ogidiaka, Eniola Samuel Agbi, Ahmed Nma Mohammed, Lateef Olumide Mustapha & Abdulsalam Latifat Abdulfatah

Abstract

Tax non-compliance is a serious issue in Nigeria that has significantly and negatively impacted the revenue base of the country. The problem of low revenue generation has deprived the government of Nigeria from carrying out its functions. Hence, this study examined field audit and companies income tax compliance in Federal Capital Territory, Nigeria: the moderating role of tax officers’ expertise. The population of the study consists of 304 Federal Inland Revenue Service staff in tax audit department in Federal Capital Territory. A sample size of 173 was determined using the Taro Yamane formula. Multiple regression with the help of STATA version 13 was used to analyze the data and to test the hypotheses of the study. The findings showed that field audit has a positive and significant effect on companies income tax compliance. When the effect is moderated by tax officers’ expertise, the result is positive and statistically significant. As a matter of policy, the FIRS should focus its attention on sectors with a high risk of non-compliance in order to optimize its resources to improve compliance. The study therefore recommended that FIRS should constantly engage in field audit as it is an integral part of companies income tax compliance. Also, FIRS should collaborate with industry groups in order to gain a better understanding and provide solutions to industry-based issues for better compliance.

Keywords

Tax audit; Field Audit; Companies Income Tax Compliance; Nigeria; Tax officers’ Expertise

References

Adekola, D. R., & Taiwo, I. B. (2020). Bearing of tax audit on tax compliance and revenue generation in Ekiti State. Asian Journal of Finance & Accounting, 12(1),115-130. Allingham, M.G., & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics, 1(3-4), 323-38. Ameyaw, B., Oppong, A., Abruquah, L. A., & Ashalley, E. (2016). Informal sector tax compliance issues and the causality nexus between taxation and economic growth: Empirical evidence from Ghana. Modern Economy, 7 (12), 1478-1497. Appah, E. (2013). A causality analysis between tax audit and tax compliance in Nigeria. European Journal of Business and Management, 5(2), 107-120. Arif, N., & Dwi, A.C. (2020). Tax audit and compliance of Indonesian individual taxpayers. Info Artha. 4 (1), 167-172. Badara, M. S. (2012). The effect of tax audit on tax compliance in Nigeria (a study of Bauchi state board of internal revenue). Research Journal of Finance and Accounting,3(4),74-80. Borrego, C.O., Loo, E., Lopes, C., Ferreira, C. (2015). Tax professionals' perception of tax system complexity: Some preliminary empirical evidence from Portugal. eJournal of Tax Research, 13 (1) 338-360. D-Agosto, E., Marco, M., Stefano, P., Filippo, M., & D’Arcangelo, M. (2017). The effect of audit activity on tax declaration: Evidence on small businesses in Italy. Public Finance Enofe, A., Embele, K., & Obazee, E. P. (2019). Tax audit, investigation, and tax evasion. Journal of Accounting and Financial Management, 5(4), 47-66. Finance Act, (2019). https://www.firs.gov.ng/wp-content/uploads/2021/02/finance-act-2019- official-gazette-1.pdf Fowler, B. (2019). Nigeria is losing $15 billion to tax evasion. https: www.nairametrics.com Idris, O.A. (2021). Tax audit and personal income tax compliance in Nigeria. Fuoye Journal of Accounting and Management Science, 4(1), 65-69. Modugu, K. P., & Anuaduba, J. O. (2013). Impact of tax audit on tax compliance in Nigeria. International Journal of Business and Social Science, 5(9), 207-215. Nhavira, J. D. G. (2016). A survey of attitudes to tax evasion by part-time business studies students at the University of Zimbabwe. The Science Probe, 4(1), 10-22. Nyor, T., Jonathan, A. J., & Mustapha, L. O. (2018). PITA 2011 and voluntary tax compliance: Towards achieving sustainable revenue generation in Kaduna State Nigeria. Journal of Finance and Accounting, 6(6), 150-161. doi: 10.11648/j.jfa.20180606.13 Ojo, O.D. (2016). The Impact of Tax Audit on the Compliance Level of Taxpayers in Kwara State. Unpublished master’s Thesis, University of Ilorin, Ilorin. Oladele, R., Aribaba, F. O., Ahmodu, A.O., & Yusuff, S. A. (2019). Tax enforcement tools and tax compliance in Ondo State, Nigeria. Academic Journal of Interdisciplinary Studies, 8(2), 27-38. Olafaju, O., & Sogunro, A. (2023). FIRS guidelines on tax inquiry processes. https://www.forvismazars.com/ng/en/services/tax/tax-alerts/firs-guidlines-on-tax-inquiry processes Olaoye, C. O., & Ekundayo, A. T. (2019). Effects of tax audit on tax compliance and remittance of tax revenue in Ekiti State. Open Journal of Accounting, 8(1), 1-17. Olaoye, C. O., & Ogundipe, A. A. (2018). Application of tax audit and investigation on tax evasion control in Nigeria. Journal of Accounting, Finance and Auditing Studies, 4(1), 79-92. Olaoye, C., O. & Ogunleye, S., A. & Solanke, F., T. (2018). Tax audit and tax productivity in Lagos state. Asian Journal of Accounting Research, 3(2), 202-210. Oladele, A.O., Ndalu, C. T., & Akani, F.N. (2021). The impact of tax audit practices on revenue generation in Nigeria. International Journal of Innovative Finance and Economics Research 9(4), 42-50. Olokooba, S. M. (2019). Nigerian taxation law, practice, and procedures simplified. Springer Nature Singapore Pte Ltd. Olusola, A.O. (2022). Impact of tax audit and investigation on revenue generation in South-west Nigeria. International Journal of Recent Research in Commerce Economics and Management, 9 (2), 8-18. Slemrod, J. (2007). Cheating Ourselves: The economics of tax evasion. The Journal of Economic Perspectives 21.1 (2007), 25–48. Taiwo, O., & Erikume, K. (2019). Tax data card Nigeria 2019. http://www.pwc.com/ng/en/assets/pdf/2019-ngr-tax-data-card.pdf Udi, A. (Nairametrics, July 2024). FIRS records new taxpayers, 20% increase in compliance. https://nairametrics.com/2024/07/12/firs-records-170000-new-tax-payers-20-increase- in-compliance/

More Articles from JOURNAL OF ACCOUNTING AND FINANCIAL MANAGEMENT

Cashflow Management and the Performance of Commercial Banks in Nigeria

Author: Jeffrey Ayas Iyakonbogha, Clement E. Ozele

The Nigerian Code of Corporate Governance and Financial Performance of Deposit Money Banks in Nigeria

Author: i, Eneaniofu Daniel Mmaduakonam, ii, Azolike Nkiru Nkechi, iii, Emeter Patrick Okechukwu, iv, Okwor Emmanuel Ejimnkonye