ASSESSMENT OF E-TAX PAYMENT ON REVENUE GENERATION EFFICIENCY IN NIGERIA Case study of Lagos State Board of Internal Revenue and Nigerian Taxpayers.


Tax is any form charge levied on a person or an institution by a governing body or its equivalent such that defaulted payment is punishable by law. The imposition of taxes and the institution of taxing is as old as civilization itself cutting across religion, race and continental borders. Prompt tax payment and reduced tax evasion is always a primary objective of the government in most civilizations that exist today. The issue of tax evasion has proven to be a difficult practice to curb even in nations with a proper database of its citizenry and the current mode of tax payment is redundant and hectic as ascertained through a survey of our case study. Some of the challenges governmental bodies have to overcome in order to encourage the prompt payment of taxes and effectively reduce evasion includes, developing convenient payment methods and having proper records keeping systems.

Taxation is essential for sustainable economic development, and tax administration is a basic function of a successful state. Taxation also helps make a government accountable to its citizens. When governments spend taxpayers’ money, they are more accountable to make budget decisions transparent and accessible.

Online tax system has received a great attention globally through the development of information technology, which affects the tax administration system. With the emergence of information technologies (IT), it is possible for the tax administrators to improve tax administration system by creating awareness about their tax structure that most of the taxpayers have limited knowledge about (Adeyemi, 2013). Electronic revenue collection in developing countries has gained increasing prominence in the policy debate recently. For instance Nisar (2013) argued that recent trends in public taxation stress the need of developing a system of tax assessment and collection that involves internet services. Several factors explain this, including the potential benefits of taxation for state building; independence from foreign aid; the fiscal effect of trade liberalization; the financial and debt crisis in the “West”; and the acute financial needs of developing countries. Governments in developing countries face great challenges in collecting tax revenues, which result in a gap between what they could collect and what they actually collect.

Wasao (2014), describes electronic tax system 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 a personal identification number, filing of returns and application for compliance certificate, electronic tax system forms part of the revenue collection reforms by Nigeria federal Inland Revenue Authority whose main motive is enhancing tax collections and tax efficiency and thus, tax revenues have been increasing rapidly due to the country's rapid economic development accelerated by the new systems.

Electronic tax filing or e-filing is a process where tax documents or tax returns are submitted through the internet, usually without the need to submit any paper return. The e-filing system encompasses the use of internet technology, the Worldwide Web and Software for a wide range of tax administration and compliance purposes. Electronic taxation differs among countries hence the name of the system differs from country to country.

Several suggested benefit of e-tax filing system have been mentioned in recent times, among them are that it allows taxpayers to conduct transactions within a few mouse clicks. This convenience can serve as a key driver of e-filing adoption. E-filing provides many aspects of ‘convenience’ to taxpayers (that is time to file, place to conduct the filing, ease-of use, information searching and online transactions) at a degree that is not available through traditional channels. E-filing also offers flexibility of time and reduces calculation error on the tax return form to the   taxpayers.

Finally, tax systems in developing economies, like those in more developed ones, face both new challenges and new possibilities as a result of technological change. Malaysia’s ongoing reform of its electronic tax filing and payment system shows how and under what conditions technology can benefit both tax authorities and taxpayers, though The goal of any tax authority is to establish a system of tax administration that allows for the collection of required taxes at minimum cost. A tax authority engages in many activities, such as processing returns and related information from taxpayers, entering tax return data into a database, matching returns against filing requirements, processing tax payments and matching them against assessments, and issuing assessments and refunds. One way to boost a tax authority’s efficiency is by expanding its use of information and communication technology and through this medium it will facilitate a broad range of services, including registering taxpayers, filing returns, and processing payments, issuing assessments and checking against third-party information, an example of this e-tax payment system in Nigeria is Integrated Tax Administration System (ITAS) introduced in 2013 by the Federal Inland Revenue Service to improve tax administration in Nigeria and transform the tax compliance process away from the current manual system which is tedious and bureaucratic.

As a result of this, the research study tends to evaluate the effect of E-tax payment system on revenue generation efficiency in Nigeria.


Worldwide, taxpayers’ resistance, underutilization and reluctance to use electronic filing system remain a great concern and still plague various tax agencies which are embracing electronic tax administration systems (EATAAC, 2002). The importance of understanding and influencing taxpayer’s acceptance of electronic filing system is critical, given the investment in technology and the potential for cost saving. Despite the increasing need to increase revenue collection and enforcement so as to provide public services, developing countries still face the challenges of low tax compliance and tax administration. project topics   final year project topics and research materials 

Electronic tax system was introduced in 2013 by Federal Inland Revenue Service to increase financial collection, administration, avail services to the tax payers all the time from anywhere, reduce costs of compliance and improve tax compliance. However, tax compliance levels remain low and tax collections are below the targets set by FIRS .Despite the increasing need to increase revenue collection and enforcement so as to provide public services, and the introduction of electronic tax systems in most countries across the global divide, developing countries like Nigeria, still face the challenges of low tax compliance and tax administration.

The E-filing offers many benefits to service providers, which are the tax authorities. To the service provider, e-filing minimizes their workload and operational cost due to the submission of tax returns in a paperless environment.  It also reduces the cost of processing, storing and handling of tax returns. Despite these benefits associated with e-filing, tax authorities face some major challenges towards the implementation of the e-filing system. One such challenge is the public perception of the e-filing system.  After using an e-service over the Internet, the public may find the e-service system easy and useful or otherwise. Since the public cannot directly communicate with tax personnel, see or touch the tax forms as the service is provided online, the e-filing service system delivered to them may not perform as expected. In addition, the public may be burdened by the time and effort spent learning the new system and accommodating any services failure. Although time is a non-monetary effort and varies among individuals, researchers have recognized that time is a cost that consumers/users must pay for any use of products/services.

Another major challenge is to ensure that the system runs smoothly and efficiently during the tax filing period each year. This refers to the technical aspects of e-filing, i.e. computer and information systems utilized for the efiling system need to be stable and reliable enough to handle a large amount of information processing, especially during the peak period of e-filing and particularly as the deadline approaches. The service provider has to ensure that the e-filing system can handle the heavy processing of data during the month of tax submission without any glitches.

Another critical issue on e-filing is that the tax authorities have to ensure that the confidentiality and privacy of the information submitted through the Internet is preserved. If tax authorities are not able to provide an e-filing system that could overcome these challenges, taxpayers might be reluctant to adopt the e-filing system. The issues, such as loss of valuable time, information privacy, glitches on the system’s performance, if not strategically overcome, could be translated into risks to current and potential adopters of the e-filing system.


The general objective of this study was to assess the effects of electronic- tax system on the revenue generation efficiency of FIRS, case of Ikeja Metropolis.

This study was guided by the following specific objectives;

To establish the effects of electronic tax payment on revenue collection efficiency by tax authority. To establish the challenges of using electronic- tax system on revenue collection efficiency. Examine the effect of online tax system on tax compliance among small taxpayers. Examine the significant relationship between perceived ease of use and online tax system usage. Identify factors affecting taxpayers’ acceptance of online tax payment system in Nigeria. Suggest possible solutions to the challenges faced in the adoption of E-tax payment system by taxpayers.


Hypotheses are assumptions on which a researcher bases his investigation and on the basis of which a confirmation of the assumed conditions are tested and validated. Based on the literature, the following hypotheses were developed. The null hypothesis (Ho):

Hypothesis One

H0: There is a direct negative relationship between online tax system (E-Payment) and efficiency of revenue generated by Government.

Hypothesis two

Ho: Perceived ease of use of e-filing will have a positive effect on the adoption of e-filing among taxpayer in Nigeria.


The Lagos State government relies heavily on taxes to fund its infrastructural and recurrent development expenditure. An increase or decline in tax revenues has a direct bearing on the economy of Nigeria as a country.

The study is likely to reveal the strengths or weaknesses associated with implementation of new technology and its benefits not only to the revenue generated by the government but also to taxpayers thereby, enriching knowledge to other state government institutions planning to embark on similar modernization programs.

The research will also contribute to the existing body of literature knowledge and may form the basis for further research in the area of E-tax technology and revenue generation in Nigeria.

This study shall also seeks to contributes to understanding the effective usage of  the online tax system through  self-employed taxpayers that leads to increase in tax compliance and revenue generation in Nigeria.

Furthermore, the recommendations made will be of great help to LSIRS and the small taxpayers in carrying out a cost-benefit analysis on the use of technology in efficient tax administration. This may aid in future policy formulation on the same.  

Finally, it will also be of use to the student, researchers for further research study, the existing and prospective taxpayer as well as any interested party from other field of study who wish to understand the practical aspect of taxation. It will assist students in their knowledge build-up and appreciation of the practical E-tax situation of the government.


Online tax system is referred to as the transmission of tax information directly to the tax administration using the Internet (Edwards-dowe, we, 2008). The online tax system makes an effective impact on the economic toward improving the level of income generation and tax compliance by the taxpayers. This is because of its convenience, time saving, cost effectiveness from both the tax administrators and the taxpayers

The scope of this study is on E-tax payment and revenue generation of government in Nigeria, with it focus on the Lagos State board of internal Revenue as the case study, and some few taxpayers in the Lagos Metropolis.

Particular care will be taken to ensure that all tax officials of Tax authority and various taxpayer at all various level of education are covered in the samples. As Lagos has become the melting point of Nigeria’s ethnic groups, the researcher will, among others, sample their opinion on the research topic in order to get the best possible answers.

In a research work of this nature difficulties are bound to be encountered. There was paucity of local literature as the researcher was threading on an area that has not been over flogged, also the researcher could not generate enough secondary data because little research has been done earlier in relation to the research study. Finance constituted another problem limiting the ability of the researcher to travel more extensively in search of relevant data and opinion.

Some tax officials filled the questionnaires in a hurry, because of their busy schedules, thus affecting the quality of their answers. Time was of the essence in this research and this also affected the researcher.


Electronic tax filing or e-filing is a process where tax documents or tax returns are submitted through the internet, usually without the need to submit any paper return. Tax compliance is defined as the full payment of all taxes. Tax non-compliance is referred to as any difference between the actual amount of taxes paid and the amount of taxes due. Tax Service Quality Taxation: is defined as the process or machinery by which individuals, groups, or communities are made to contribute in some agreed quantum and method for the purposes of the administration and general development of the society they belong. Tax service quality (TSQ) can be defined as entire taxpayers' perceptions or evaluation associated with electronic service connection with the Internet marketplace Responsiveness is aimed on how fast are the tax administrators in responding to any inquiries made by the taxpayers. Responsiveness are referring to the preparedness of self-employed taxpayers to accomplish a goal in an accurate and timely manner. Reliability is the process by which the system has the ability to assess it administration function accurately and dependably by evaluating the requisition. Electronic tax systemis 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 a personal identification number, filing of returns and application for compliance certificate. CITA: (Company Income Tax Act) it is a Federal Law operated by the FIRS, which deals with the taxation of all limited liability companies in Nigeria with the exception of those engaged in petroleum operations.

10. Persons/tax payers: It includes all taxable persons be it individual or corporate bodies.

FBIRS:           (Federal Board of Inland Revenue Services): It is an operational arm of Federal Board of Inland Revenue which is responsible for the Federal Tax Matters.


ASSESSMENT OF E-TAX PAYMENT ON REVENUE GENERATION EFFICIENCY IN NIGERIA Case study of Lagos State Board of Internal Revenue and Nigerian Taxpayers.


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