EXAMINATION OF THE EFFECTIVENESS OF TAX IDENTIFICATION NUMBER (TIN) IN COMBATING TAX EVASION IN NIGERIA (A CASE STUDY OF LAGOS STATE INTERNAL REVENUE SERVICE)
CHAPTER ONE
1.1 Background of the Study
Taxes and tax systems are critical components of government revenue generation. According to Brautigam (2020), taxes support states' ability to achieve their aims. They are one of the primary arenas for the conduct of state-society relations, influencing the balance of accumulation and redistribution that gives states their social character. Thus, taxes increase the capacity to provide security, meet basic necessities, and promote economic development, as well as legitimacy and consent, contributing to the formation of a consensual, accountable, and representative government. The way a tax system is administered is an important aspect (Naiyeju, 2021). According to Bahi and Bird (2020), no tax is better than its administration; hence, tax administration is extremely important, and one of the primary goals of tax administration is to achieve maximum compliance by taxpayers of all types with their taxation duties. Unfortunately, many countries' tax administrations are poor, characterised by widespread evasion, corruption, and coercion.
Often, overall tax rates are low, and considerable segments of the informal economy are completely untaxed (Brautigami, Fjelftand, and Moore, 2021). A country's tax structure frequently reflects its social beliefs as well as those in power (Ross, 2021). To establish a taxation system, a country must make decisions on how to distribute the tax burden and how to spend the money collected. In democratic countries where the public elects individuals in charge of designing the tax system, such as Nigeria, these decisions reflect the type of community that the public or government desires to create. According to Parkin (2020), in nations where the public has less control over the taxation system, the system may be more reflective of the values of those in power, as governments use various types of taxes and tax rates. This is done to disperse the tax burden among individuals or classes of the population who engage in taxable activities, such as enterprises, or to redistribute resources between individuals or classes of people.
Taxpayer Identification Number (TIN) is a ten-digit number that is unique to each taxpayer in Nigeria, including individuals and corporations that receive a consistent income. The Taxpayer Identification Number (TIN) is a platform that will harmonise taxpayer identification and registration in Nigeria; it will strengthen ties between Nigeria's various tax authorities and aid corporations, information sharing, and revenue generation at all levels of government (Joint Tax Board [JTB], 2021). The Joint Tax Board (JTB) launched the Taxpayer Identification Number (TIN) programme in partnership with the Federal Inland Revenue Service (FIRS) and the 36 State Boards of Internal Revenue (SBIR). It is an electronic taxpayer registration system that will uniquely identify all taxpayers and be available nationally. The Joint Tax Board (JTB) is responsible (as amended by sections 8(q)(d) of the Personal Income Tax Act and section 8(q) of the Federal Inland Revenue Service Establishment Act 2007) for ensuring collaboration in the issuance and administration of Taxpayer Identification Numbers (TINs) to all taxable entities. It also establishes a national platform for all taxpayers to register and be assigned an identification number, so facilitating effective tax administration. However, it is generally known that Nigerian tax administration has encountered numerous obstacles and challenges, including non-identification, registration, and taxpayer compliance. This intrinsic difficulty is also linked to the establishment of the Taxpayer Identification Number (TIN) programme in our tax system.
1.2 Statement of the Problem
One of the issues with tax administration in Nigeria's three tiers of government is the incorrect identification of tax bases at each level. The government's inability to adequately track all income earned by individuals and corporate entities entitled to pay taxes has contributed to a decline in revenue (Adebayo & Adewumi, 2022). The Federal Republic of Nigeria Constitution of 1999, as amended in 2010, provides an approved list of taxes and levies accruable to the three tiers of government, but there have been several court cases in respect of some tax bases, often between the Federal and State governments, such as the case between the Federal and Lagos State governments on tax consumption.
As a result, it is necessary to evaluate the consequences of using a taxpayer identification number on internally produced revenue and tax payment in Lagos State.
1.3 OBJECTIVE OF THE STUDY.
The main objective of the study is the examination of the effectiveness of the tax Identification Number in Combating Tax evasion in Lagos State, Nigeria.
1.4 RESEARCH QUESTIONS.
What is the meaning of the Tax Identification Number?
What is Tax evasion?
How effective has Tax Identification been in Curbing Tax evasion
?
What is the effect of the Tax Identification The number on Tax evasion
in Nigeria?
1.5 SIGNIFICANCE OF THE STUDY.
This study will help find a solution to the effect of the Tax Identification Number on Tax evasion in Nigeria.
1.6 SCOPE OF THE STUDY.
The study focuses on the examination of the effectiveness of tax Identification Number in Combating Tax evasion in Lagos state, Nigeria.
References
Adebayo, O., & Adewumi, A. (2022). Tax administration challenges in Nigeria: An analysis of the impacts of non-compliance on revenue generation. Journal of Nigerian Taxation, 33(1), 50-61. https//doi.org/10.1016/j.jnt.2022.02.005
Bahi, M. M., & Bird, R. M. (2020). Tax administration in developing countries: A study of best practices and challenges. Public Finance Review, 48(4), 321-339. https//doi.org/10.1177/1091142120913441
Brautigami, J., Fjelftand, M., & Moore, J. L. (2021). Tax systems and economic growth: How informal economies affect tax compliance and administration. Development Policy Review, 39(2), 215-228. https//doi.org/10.1111/dpr.12598
Brautigam, D. (2020). Taxes and governance: The role of taxation in shaping state-society relations in developing nations. African Development Review, 32(3), 432-445. https//doi.org/10.1111/1467-8268.12461
Enyi, P. (2012). The role of tax administration in fostering economic development in Nigeria. International Journal of Business and Management, 7(4), 34-45. https//doi.org/10.5539/ijbm.v7n4p34
JTB (Joint Tax Board). (2021). Taxpayer identification number (TIN) and its role in effective tax administration in Nigeria. JTB Bulletin, 15(2), 11-18.
Naiyeju, O. (2021). Tax compliance and administrative challenges in Nigeria: A study of tax administration in Lagos State. Journal of Business Research, 43(5), 88-102. https//doi.org/10.1016/j.jbr.2021.06.007
Parkin, M. (2020). Tax systems and their role in economic development. Journal of Economic Policy, 10(2), 119-134. https//doi.org/10.1056/jep.2020.10.2.119
Ross, M. L. (2021). How the power of the state shapes tax systems and public services: A comparative study. World Development, 132, 183-198. https//doi.org/10.1016/j.worlddev.2020.104964
.