The recent global crisis in the world has brought to the fore the need to note that this overdependence on oil creates unnecessary shocks and thus, the need for diversification of the nation’s resource base and long term growth path. The oil is an exhaustible and dwindling resource, while taxation is the only non-exhaustible veritable source of resource and revenue generation to the government both at the tiers of government.(Oloyede, 2010:1).

Nigeria is a monolithic economy with strong dependence on the oil sector; this over-dependence makes the economy to be more vulnerable to external manipulation and adversely affects the planning horizons in the country.

Taxation has rightly been identified as a major tool in the strengthening of domestic resource mobilization and consequently, the search for ways and means of expanding the tax base and also strengthening tax administration has been intensified. Taxation is considered a veritable source of revenue for financing developmental as well as people oriented programs in virtually all countries, irrespective of whether they are classified as developed or developing economies. That taxation has been one of the most important weapon available to government for marshalling financial resources is undisputable (Atta-Mills, 2002: Teidi, 2003 and Oloyede, 2010). 

Nigeria is governed by a federal system; hence its fiscal operations also adhere to the same principle. This has serious implications on how the tax system is managed in the country. In Nigeria, the government’s fiscal power is based on three – tiered tax structure divided between the federal, state and local governments, each of which has different taxes jurisdiction. As of 2014, all three levels of government share about 50 different taxes and levies.

It is needless to emphasize that the existence of well defined tax laws alone cannot guarantee the success of tax collection effort. There must always exist an efficient and effective tax administration as a sine qua non to successful domestic resource mobilization.

In some developing countries, Governments impose many types of taxes, individuals pay income taxes when they earn money, consumption taxes when they spend it, property taxes when they own a home or land, and in some cases estate taxes when they die. In the United States, federal, state, and local governments all collect taxes. Taxes on people’s income play critical roles in the revenue systems of all developed countries.  

Taxation as a major non-oil revenue has been the mainstay of most developed countries, in contrast to developing countries that still depend on primary products. Also, indirect taxes appear to be in vogue in developed countries, due to higher return, lower administration cost and higher compliance rate, however, most developing countries still rely on direct taxes with lower compliance rate (Oloyele, 2010: 3). 

it is increasingly apparent, however, that tax administration must receive far greater attention if the goals of tax reforms and policies are to be achieved in the face of ever growing economy. Much of tax policy is being directed to obtaining increased revenues to enable governments and their agencies or parastatals to carry out their economic planning. Yet it is true in Nigeria that effective administration of some of the existing taxes would provide a considerable and reasonable part of the needed revenue. 

The Nigerian tax system has undergone several reforms geared towards enhancing tax collection and administration with minimal enforcement cost. The recent reforms include: the introduction of TIN (Tax Payers Identification Number), which became effective since February, 2008. Automated Tax System (ATS) that facilitates tracking of tax positions and issues by individual tax payer, E-Payment System (EPS) which enhances smooth payment procedure and reduces the incidence of tax touts, Enforcement scheme (special purpose tax officers), all these have led to an improvement in the tax administration in the country.

Without recourse to argument, taxation no doubts, remains a veritable and inexhaustible source of revenue to the government; but Nigeria‟s dependence on Oil as the major foreign exchange earner makes her economy vulnerable to external manipulations.

An effective and efficient  tax reforms or administration in the country will go a long miles in helping the governments in devising means to tax successfully the informal and agricultural sectors of the economy which has remained largely untaxed in spite of their inherent potential to provide a reasonable portion of the revenues needed by the governments. However, one common and easily noticeable feature of the country is her low tax effort. While the overall average tax effort level of developing 

countries is estimated at about 18% of Gross Domestic Product (GDP), the average for industrialized countries is around 24% (Atta-Mills, 2002).

It is in the light of the above therefore, that this work is tailored to bringing into public domain the critical challenges, problems and prospects of tax reforms and administration in Nigeria with Ogun State Board of Internal Revenue as the case study.


Aside from being a major source of revenue to most nations, taxation also plays very significant roles in the promotion of social and economic welfare, provision of public goods, redistribution of income, promotion of economic stability, as well as regulation of economic activities and consumption of goods and services. Because of the aforementioned importance of taxation, developed economies have invested considerably on legislative tax reforms, taxpayer education, and development of new technologies to aid in evolving effective tax systems, and to boost tax collections.The institutional framework, within which the revenue administration operates impact directly on the effectiveness and efficiency of the tax administration. The institutional framework in operation in Nigeria is many and varied. The general trend has been to have separate administrations for internal taxes and custom duties. However this policy and method of operation is common in some other countries.

Another challenging problems in the administration of tax in Nigeria  is the location of the assessment and collection functions within the tax administration. Problems also emanate from the frequent changes in the tax laws and policy: Every year the annual budget estimate introduces new measures and procedures, amends or cancels existing ones.

These frequent changes can make the law confusing as well as complicate the tax structure. After a few years these changes and amendments become so many that the tax payer finds it difficult to know which laws are applicable.

Another frequent and alarming problem is, Non-Compliance Strategy: Mamud (2008:2), observes that the recurring problem with Personal Income Tax (PIT), is the non-compliance of employers to register their employees so as to remit such taxes to relevant authorities. According to him, government in 2011 amended the 1973 PIT Act to make non-compliance employers liable to penalties up to #5000.00 as well as liable for the payment of all tax arrears. Employers that failed to keep proper records also face a penalty of #10, 000.00. The implication of the above is that these employers may feel reluctant to remit their employees names to the relevant authorities hence they may always bribe their way through. This problem is not limited to PIT but also Pay As You Earn (PAYE), withholding taxes, and taxes paid by ministries and agencies in the three tiers of government.

Multiple Taxes: The study group of 2002 highlighted the multiple taxes in the three 

tiers of government as the most serious problem for the country’s tax administration system. The group emphasized that companies are subjected to a wide range of taxes, levies and rates at the state and local levels in addition to the federal income tax. According to Odusola (2006: 3), the imposition of multiple taxes in the system imposes restrictions on inter-state commerce and trade, making locally produced goods uncompetitive and in some instances causing business closure. The failure of government to address this issue has affected resources that could have accrued to it as some business organizations have folded up as a result. Some of those who have remained in business usually put up hostile and confrontational attitudes when approached to pay these taxes.

Tax evasion and tax avoidance: Despite the emphasis on the importance of taxation and the efforts made at improving its efficiency, citizens’ aversion to taxes have remained a problem that most tax authorities have to grapple with. This is because individuals will always look for a means –legal or otherwise–to reduce or even completely avoid paying taxes. This result in heavy revenue losses to governments and ultimately affects their ability to meet their obligations.

Corruption: AmartyaSen.argued that corruption or corrupt behaviour involves the violation of established rules for personal gain and profit. (Sen ,1999) Corruption is efforts to secure wealth or power through illegal means private gain at public expense; or a misuse of public power for private benefit. The widespread of corruption in the tax system in Nigeria and frustrate effective tax administration and reforms in Nigeria. for example, Taxpayers prefer to bribe the tax officials than to pay tax and big companies are also not exempted from this practice. This leads to lack of proper accountability and paucity of funds as the resources available are not enough to cater for the well being of the country and thereby leading to loss of revenue.


Identifying critical tax administration challenges in the 21st century Nigeria and measures required to meet challenges will not only guarantee improved revenue base for the country but also position the country properly to take full advantages offered by the new millennium. This research work shall examine the tax reform and administration and it’s compliance in Nigeria by analyzing the tax gap in the system over the years thereby revealing the critical challenges that need be tackled.

The main objective of the study is to examine the problems and challenges affecting effective tax administration and reforms in Ogun State Board of Internal Revenue, with a view to proferring solutions, recommendation and strategies through which such problems can be eliminated completely.

The specific objectives are:

1. To find out whether lack of staff training affect of poor revenue collection in the state.

2. To identify if poor tax collection is because of pronounced poverty among the tax paying public of Ogun State. 

3. To ascertain the rate of non-compliance of individuals, companies with tax laws and policy. 

4. Eliminate the constraint affecting effective tax reform and administration in Nigeria.

5. Identify the effect of poor tax administration on the Nigeria revenue generation.

6. Identify new techniques to uncover corruption, tax avoidance and evasions by tax paying public of Ogun State.


The research question refers to tentative questions in a research studies which tends to provide a guidance and in which answers are provided for in the research studies.

For the purpose of the research study, the following research questions were asked:

1. Does lack of staff training affect of poor revenue collection in the state?

2. Does pronounced poverty among the tax paying public affects effective tax administration and reform in Ogun State?

3. The rate of non-compliance of individuals, companies with tax laws and policy?

4. Are there any constraint affecting effective tax reform and administration in Nigeria?

5. What are the effect of poor tax administration on the Nigeria revenue generation?

6. Identify new techniques to uncover corruption, tax avoidance and evasions by tax paying public of Ogun State?


From the foregoing discussion, the research focuses on the problems, prospects of tax reforms and administration in Nigeria using the Ogun State Board of Internal Revenue as a case study.


Limitations envisage in this research work are:

Information Generation: The work however, has experienced limitations by way of extracting information from some staffs of Ebonyi State Board of Internal Revenue, who for some reasons found it difficult to respond to questions.

Financial and transportation constraints: Also there might be financial and transportation constraints to this study as these two factors will be at our capacity which might not be enough to give us desired results.


Taxes pay teachers. Taxes train nurses. Taxes maintain roads, deliver medicine, provide clean water. This is as true in the developing world as it is in the developed world. Tax is the most important, sustainable and predictable source of public finance for almost all countries.

Succinctly, there cannot be a better time to work on the critical problems of tax administration in the 21st century than now especially with the growing tax consciousness among the various tiers of governments in Nigeria, especially in Ogun State.

If countries are to eradicate poverty and hunger, then they will need to do so by increasing their own public finances; principally through tax revenues. 

This study will continue to be of interest to majorly the governments, civil servants, government establishment, agencies, parastatals, and other public corporation in the public sectors.

It will also be of great importance to various management of companies, tax administrators, revenue collector, and tax officials and other users of laws and policy;It will also give them general insight on the challenges affecting effective tax reforms and administration in Nigeria.

This research would contribute to the existing literature by focusing on tax administration in Nigeria with a view to identifying the critical problems that are confronting the tax system so that appropriate measures could be taken to tackle them. 

The work will be of immense benefit to students of tax policy, tax administration and taxation generally as it will provide them insight into the various challenges of tax administration.

Finally this study will be of great significance to schools and students, it will serve as a reference point for future researchers who will want to research more on the topic. 


1. Tax: tax is a compulsory levy payable by individual economic units or corporate bodies to government without any direct quid pro quo from the government.

2. Administration is the capacity to coordinate and execute many and often conflicting social demands in a single organism so perfectly that they should all operate as a unit

3. Thhax administration: according to Dale , implies tax policy making and execution. That is, it involves planning, organization, commanding, coordination and control.

4. Non-Compliance: can be defined as the failure on the part of a taxpayer to correctly file returns, report actual income, claim the correct deductions, reliefs and rebates and remit the actual amount of tax payable to the authority on time.

5. Taxation: is defined by Ogundele (1999) 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.

6. Tax evasion: refers to any intentional, illegal reduction of tax payments, which usually takes the form of underreporting income, sales or wealth, or overstating deductions (Schneider, Braithwaite & Reinhart 2001), including failure to file appropriate tax returns.

7. Tax Avoidance: refers to the reduction in tax burden by means of practices that take full advantage of the tax code or exploiting the loopholes in the tax laws to reduce tax liabilities by arranging ones tax affairs using tax shelters in the tax law, and avoiding the tax traps in the tax laws.

8. Corruption: is an anti-social behaviour conferring improper benefits contrary to legal and moral norms, and which undermine the authorities to improve the living conditions of the people.


The Ogun State Board of Internal Revenue is the organ responsible for the generation of revenue for the state government on Ogun State.

The Ogun State Internal Revenue Service is a State Revenue Agency that derives its existence from the Personal Income Tax Act Law of the Federation 2004, which stipulates the establishment of the THE BOARD OF INTERNAL REVENUE by all the States of the Federation. The Ogun State Edict of 1996 established the Board to carry out the functions of assessing, collecting and accounting for taxes, levies and fees with the additional responsibility of tax policy formation for the state.

The Ogun State Internal Revenue Service is a State Revenue Agency that derives its existence from the Personal Income Tax Act Law of the Federation 2004, which stipulates the establishment of the THE BOARD OF INTERNAL REVENUE by all the state  

of the federation in Nigeria.

The Ogun State Edict of 1996 established the Board to carry out the functions of assessing, collecting and accounting for taxes, levies and fees with the additional responsibility of tax policy formation for the state.

In April 2004, The Governor of the State(Ogun) gave the Board the authority to implement the said Edict of 1996, in its entirety. That mandate led to the restructuring of the Board in terms of organisational structure and improved revenue generation.

The States‟ Board of Internal Revenue in Nigeria are empowered through the Income Tax Management Act (ITMA) as amended in 2004,to levy income taxes on individuals, communities families and trusts. According to the Income Tax Act of (2004).



Pay As You Earn (P.A.Y.E)

Direct Assessment (Self Employed)

Minimum Tax

Back Duty Assessment


Capital Gains Tax

Landed Property

Stamp Duty


Vehicle Registration & Licensing (Motor Vehicle and Motorcycle)

Number Plate (Motor Vehicle and Motorcycle)

Learner's Permit

Trailers & Tippers Permit

Motor & Cycle Stickers/Badges



Slot Machine Gaming

Pools Betting







Director's Fee

Consultancy/Management Services

Contract Supplies





 At the head of Ebonyi State Board of Internal revenue is the Chairman. He is assisted in the management of the Revenue Board by a management team of four members. 

The team comprises: The Directors of direct and indirect taxes, the PRS and the Secretary, who doubles as Head of Department of Administration. 

Other heads of departments who are not members of the management are: the head of Internal Audit,and the head of finance and supplies department. 

 In order to achieve the goals and objectives for which the Board was set up, each of the departments performs distinct but related roles which are explained thus: 

 The Chairman  

⦁ The chairman is the head of the tax collection machinery of the state. He therefore, makes sure that the state tax policy is strictly adhered to. 

⦁ He leads the Board to defend their budget during budget defence. 

⦁ He represents the state at the Joint Tax Board (JTB) meetings and brings the 

resolutions of the Board to bear on the Board of internal revenue in particular and the State in general.

⦁ He takes decisions that are in the best interest of the Board and the State. 

⦁ He ensures that materials necessary for the execution of the duties of the office are made available at all time. 




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