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Tax Audit, Penalty And Tax Compliance In Nigeria

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  • Iyere Oghuma, Richard

    (Ambrose Alli University)

Abstract

This study examined the influence oftax audit and penalty on tax compliance paradigm ofcompanies' income taxpayers in Nigeria. Discourse on tax in terms of audit, penalty and compliance is germane because governments at all levels depend on revenue generated through taxation to drive their programmes. Cross-sectional survey design was adopted for the study. The population for the study comprised allregistered corporate taxpayers in Nigeria.A totalofone hundred andfifty (150) corporate taxpayers whose tax files are domiciled in Edo State were selected for this study. The selection ofthe sample size was based on stratified random sampling method. Copies of questionnaire were distributed to the selected companies. The questionnaire was adapted from the work ofPalil (2010). To evaluate the strength of the measures used, Ordinary Least Square (OLS) regression was used for modelestimation through Econometric Views (E Views) software. Findings revealed that tax audit and tax penalty have positive and significant relationships with tax compliance. It is recommended that effective tax compliance canbe achieved byincreasing the frequencyoftax auditandby strengthening tax penalty to serve as deterrent mechanism against non-compliance. The paper concluded that corporate taxpayers should perceive their income tax payments as contribution to creating conducive business environment.

Suggested Citation

  • Iyere Oghuma, Richard, 2018. "Tax Audit, Penalty And Tax Compliance In Nigeria," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 7(2), pages 74-86, December.
    • Handle: RePEc:ris:ijafic:0005
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    References listed on IDEAS

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    1. Keith Walsh, 2012. "Understanding Taxpayer Behaviour – New Opportunities for Tax Administration," The Economic and Social Review, Economic and Social Studies, vol. 43(3), pages 451-475.
    2. Alm, James & Blackwell, Calvin & McKee, Michael, 2004. "Audit Selection and Firm Compliance With a Broad-Based Sales Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(2), pages 209-227, June.
    3. Erich Kirchler & Stephan Muehlbacher & Barbara Kastlunger & Ingrid Wahl, 2007. "Why Pay Taxes? A Review of Tax Compliance Decisions," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0730, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    4. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
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    2. Triadi Agung Sudarto & Dodik Juliardi, 2022. "The effect of perceptions on tax evasion and tax sanction on ethical behaviour of accounting student compliance," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(10), pages 206-216, December.

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