AN EXAMINATION OF CORPORATE INCOME TAX LEGISLATION AND ITS IMPACT ON REVENUE GENERATION IN NIGERIA

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Author

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Department of Law

ABSTRACT
This thesis aim at utilizing the Companies Income Tax Act to enhance revenue generation in Nigeria, which is used to fund development in the economy. Company income tax is a major source of revenue to all governments in the world, Nigeria inclusive. It is levied by government against companies operating in Nigeria, which is used to raise revenue for sustainable economic development and administration of governmental policies. Companies income tax (CIT) is a tax on the profits of registered companies carrying on business in Nigeria. It is regulated by Companies Income Tax Act (CITA) Cap.C21 Laws of Federation of Nigeria, 2004.The study adopted essentially doctrinal method of research which involved the collection of materials or facts from, Constitution of Federal Republic of Nigeria 1999 (as amended), Tax Statutes, case laws, which the geographical application is limited to Nigeria only, various text books, articles contained in law journalsand internet materials that are relevant to the subject matter of the research were used. However, empirical method of research was also adopted in some aspects, which consist of questionnaire and interviews through which facts and data were collected, analyzed and interpreted. Accordingly the research specificallyachieved the following objectives; effective and efficient management and collection of taxes through Company Income Tax Act, it also determined the extent of contribution of corporate income tax to revenue generation in Nigeria and determined the tangible things/development taxpayers enjoyed as a result of payment of their taxes, and were inspired to pay more. The problem of the research were the conflict in the classification of companies in Nigeria arising from Section 394(4) CAMA 2020, Companies Income Tax Act (CITA) Cap.C21 L.F.N 2004 and Finance Act 2020, the effect of conflicting definitions of small companies under CITA and CAMA 2020, also impacts the required documents for the purposes of filing the company?s annual income tax returns. Section 402 of CAMA 2020, exempts companies which are yet to commence business and small companies from appointing auditors and conversely in line with Section 55 CITA, all companies are required to file annual self-assessment returns. Finance Act has amended Section 55 CITA, such that instead of audited accounts, FIRS may specify an alternative form of accounts, to be included in the tax returns. Other problems of the research include the tax evasion and avoidance which have hindered increase in revenue generation of the federal government, inadequate tax personnel to cover all areas of operations of FIRS to enhance revenue generation, mismanagement of tax payments collected by officials of FIRS, and unreliable and inadequate data problem that have hindered FIRS from improving her functions.The findings of the research based on the doctrinal and empirical methods of research used were, monetary penalties/fines contained in the Companies Income Tax Act are insignificant and inadequate to deter the offences for which they are prescribed for; high rate of 30% tax for large companies discouraged the investors from investing in Nigeria and also discouraged the local industries in Nigeria from paying their correct taxes; conflicts in the classification of companies in Nigeria between CAMA 2020 and CITA for tax purposes have created ambiguities, for instance a company with a turnover of N110million qualifies as a large company under CITA for tax purpose, the same company do not qualify as a small company under CAMA. and lack of skilled manpower and modern technology in the operations of FIRS adversely affected her revenue generation. The research recommended that adequate monetary penalties/fine should be provided to deter offences, for instance the fine of N600.00 provided for unauthorized collection of taxes contained in Section 95(b) of CITA should be increased to N50,000.00; reduction of 30% tax rate for large companies to 25% will encourage investors to invest in Nigeria; harmonization of the conflict between CAMA 2020 and CITA over classification of companies,is necessary to ensure uniformity and confidence of taxpayers and stakeholders and eliminate resultant conflicts. Finally, the research concluded that corporate income tax legislation has significantly impacted on the revenue generation in Nigeria.