Academic journal article Journal of Management Research

The Perception of Corporate Taxpayers' Compliance Behaviour under Self-Assessment System in Nigeria

Academic journal article Journal of Management Research

The Perception of Corporate Taxpayers' Compliance Behaviour under Self-Assessment System in Nigeria

Article excerpt

Abstract

This study examines the perception of corporate taxpayers on compliance behaviour under self-assessment system in Nigeria. Data was gathered using questionnaire survey method. The questionnaires were distributed to the 267 public listed companies in Nigeria. Out of which 53 were returned and analyzed using the multiple regression statistical method of analysis. The findings in the study revealed that the corporate taxpayers perceived the tax laws to be complex for their understanding. The result also indicated that tax complexity, tax fairness, tax responsibility and compliance behaviour were found to be positively and significantly related. Therefore, the study recommended that the relevant authorities should review and simplify the tax laws for the taxpayers' understanding.

Keywords: Compliance Behaviour, Tax Complexity, Tax Fairness, Tax Responsibility, Corporate Taxpayers.

1. Introduction

Taxation has been a common phenomenon all over the world (Reckers, Sander & Roark 1994). Countries impose tax to boost their revenue generation and enhance economic stability (Omoigui 2007). Every government is expected to perform various functions, some of which are the day to day general administration, the maintenance of law and order, and to provide essential services to the people. On the other hand, government is also concerned with the formation and implementation of the socio-economic programmes aimed at promoting the welfare of its citizens. Moreover, the government needs fund to be able to discharge its functions to the governed. It has been observed by Fjeldstad (2013) that an "effective tax system in most countries has been considered as essential for suitable development because it can mobilize domestic revenue and avoid dependency on single natural resources especially in emerging economies". This has made it possible for government to use taxation as a tool to achieve its objectives.

Self-assessment system (SAS) is one of the major ways of tax collection which stands as a contemporary trend of tax administration (Sarker 2003). The reason for adopting SAS is because it is considered as a major means of tax collection in some countries, this is to better the tax administration (CATA 2003 and Doran 2009). The objective of SAS heavily relies on voluntary compliance that is for taxpayers to voluntary comply with SAS, they have to understand the tax laws and the changes in the legislation (Choong 2009 and Loo, Mckerchar & Hansford 2010). The purpose of this study is to examine the perception of corporate taxpayers on compliance behaviour under self-assessment system in Nigeria. Nigeria adopted SAS in 2011 and making it compulsory for corporate taxpayers to compute their tax liability using self assessed (FIRS 2012).

2. Literature Review

Taxpayers are expected to take responsibility of their assessment and ensure that they compute their tax liability themselves (Choong 2009, Loo et al 2010, FIRS 2012 and Isa 2012). The aim of SAS is not restricted to voluntary compliance alone. Isa (2012) extended the objectives of SAS to be driven by reduction in administrative costs and simplifying the assessment system. Voluntary compliance has been an issue to self-assessment system. Moreover, taxpayers are expected to intentionally comply with their tax responsibilities in accordance to the tax laws as specified.

2.1 Tax Complexity

Tax complexity is another identifiable important corporate taxpayers' compliance variable that influences compliance behaviour and it may be the genesis of tax avoidance (Isa 2012 and Sapiei & Kasipillai 2013). Moreover, Loo et al (2010) stresses that tax laws are too complicated for taxpayers to keep abreast considering the frequent changes in the tax law. The authors perceived tax complexity as complication in the tax law and frequent changes in the law. These issues may possibly be the reason why some corporate taxpayers deploy the services of external tax professional when they experienced difficulties in tax issues (Sapiei 2012). …

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