Abstract:
Tax Administration is a concept formulated to generate revenue, control inflation and for
retribution of income. The primary objective of tax is the generation of revenue to help the government to run the administration and provide basic facilities or amenities for the citizens of the country, that is, finance ever-increasing public-sector expenditure. This paper seeks to give an appraisal of the Tax Administration system in Nigeria. It further outlines various tax laws and the Organs of tax administration.

1.0 Introduction
Taxation in the Nigerian economy is a significant system that helps in the
generation and redistribution of revenue to provide public services and improve the economy. Administration of a tax system covers an enormous and diverse number of rules. 1 Unlike the substantive laws of taxation, there is no basic “principle” of administration. In contrast, an income tax law, a property tax law, or a value-added tax (VAT) law each has unifying themes. While each may include some complex definitions, simplifications, or exceptions to these themes, there are at least a limited number of principles, typically related, around which the law can be structured and to which both policy analysts and drafters can return when creating the law.

2.0 Concept of Taxation
Tax Administration means the verification of a tax return or claim for credit, rebate or refund; the investigation, assessment, determination, litigation or collection of a tax liability of any person; the investigation or prosecution of a tax-related crime; or the enforcement of a tax
statute. 2

1 LEXOLOGY, “Summary of Tax Laws In Nigeria “, Resolution Law Firm.
<https://www.lexology.com/library/detail.aspx?g=dee9e50c-2b10-4eb8-b477-b4896bd17667> accessed April
15, 2022
2 <https://www.lawinsider.com/dictionary/tax-administration> accessed 16 August, 2022

Similarly, Tax administration is the execution of the core activities for collecting taxes:
Identifying “taxable subjects” (individuals or business enterprises); Assigning unique
identifiers that make it ; possible to recognize them in future; Creating a system of records on taxable subjects; Establishing the procedures for taxable subjects; to transfer to the tax agency the information needed to assess their tax liabilities (“filing”); Regularly assessing tax liabilities; Billing taxpayers accordingly; Collecting payments; Dealing with non-payments, arrears and refunds; Auditing the tax assessments of samples of taxpayers; Resolving disputes between taxpayers and tax collectors. 3 Similarly, Tax administration is simply defined as the implementation of the various tax laws in a country in order to achieve its objective. 4

3.0 Nigerian Tax System
The Nigeria tax administration is carried out by the three tiers of government, namely; the Federal Government, the thirty-six States of the Federation and the Federal Capital Territory and the various Local Governments, through the machineries set up by the respective government.

Taxes meant to be collected by the Federal government includes: Company income tax;
Withholding Tax – on Companies, residents of the Federal Capital Territory; Abuja and non-resident individuals; Petroleum Profits Tax; Value Added Tax; Education tax; Capital gains tax – on residents if the Federal Capital territory, Abuja, bodies corporate and non-resident individuals; Stamp Duties on bodies corporate and residents of the Federal Capital territory, Abuja; Personal Income Tax in respect of (a) members of the armed forces of the Federation; (b) Members of the Nigeria Police Force, (c) residence of the Federal Capital Territory,Abuja; and, (d) staff of the Ministry of Foreign Affairs and non-resident individuals; and National Information Technology Development Levy.
Consequently, Taxes and levies to be collected by State governments are: Personal income tax in respect of – (a) Pay-as-You-Earn (PAYE); and (b) Direct taxation (Self-assessment);Withholding tax (individuals only); Capital gains tax (individuals only); Stamp duties on instruments executed by individuals; Pools betting and lotteries, gaming and casino taxes; Road taxes; Business premises registration fees in respect of urban and rural areas which includes registration fees and per annum renewals as fixed by each state; Development levy (individuals only); Naming of street registration fees in the state Capital; Right of occupancy
3 United Nations Economic Commission for Africa, “Tax Administration In Africa”, Chapter 5, pg. 96
4 Serah Sanni, “Basic principles of Taxation in Nigeria”, MONDAQ. <https://www.mondaq.com/nigeria/tax-
authorities/870372/basic-principles-of-taxation-in-nigeria> accessed 16, August, 2022.

on lands owned by the state Government in urban area of the State; Market taxes and levies where State finance is involved; Land Use Charge where applicable; Hotel, Restaurant or Event Centre Consumption Tax, where applicable; Entertainment tax where applicable; and Environmental fee or levy; Mining, Milling and quarrying fee, where applicable; Animal Trade Tax, where applicable; Produce Sales Tax; Slaughter or Abattoir fees, where state finance is involved; Infrastructure Maintenance Charge or Levy, where applicable; Fire Service Charge; Property Tax where applicable; Economic Development Levy, where applicable; Social Service Contribution Levy, where applicable; Signage and Mobile Advertisement, jointly collected by States and local Governments.
Lastly, the levies and taxes collected by Local government includes: Shops and kiosks rates; Tenement rates; On and Off Liquor Licence fees; Slaughter slab fees; Marriage, birth and death registration fees; Naming of street registration fee, excluding any street in the State Capital; Right of Occupancy fees on lands in rural areas, excluding those collectables by the Federal and State Government; Market taxes and levies excluding any market where State finance is involved; Motor Park levies; Domestic animal licence fees; Bicycle, truck. Canoe, wheelbarrow and cart fees, other than a mechanically propelled truck; Cattle tax payable by cattle farmers only; Merriment and road closure levy; Radio and television licence fees (other than radio and television transmitter); Vehicle radio licence fees (to be imposed by the Local Government of the State in which the car is registered); Wrong parking charges; Public convenience, sewage and refuse disposal fees; Customary burial ground permit fees; Religious places establishment permit fees; Signboard and Advertisement permit fees; Wharf Landing Charge, where applicable.

3.0.1 Structure of Nigeria Tax System
The Nigerian Tax system is structured/classified on three grounds – Tax base, tax burden and tax subject. Tax burden is further divided into Proportion, progressive and regressive tax.
Proportion Tax has a fixed rate that is applied to a tax payer’s assessable income to obtain the tax liability. The tax payable is proportional to the taxpayers’ income. Progressive Tax applies higher tax rates as income increases. Its sole objective is to redistribute income in the economy. It is also called “Pay as you earn” while Regressive Tax is a concept that implies the higher you earn, the lower the tax you pay.
Furthermore, Tax subject is subdivided into Direct tax and Indirect Tax. Direct tax is
assessable directly on the taxpayer who is required to pay tax on his property, income or
profit. Examples of Direct taxes include: Personal income tax, Companies Income Tax,
Capital Gains Tax, Petroleum Profit Tax and Education Tax. indirect taxes are imposed on
commodities before they reach the consumer, and are paid by those upon whom they
ultimately fall. They are paid as part of the selling price of the commodity. Examples are:
Customs and excise duties, Value Added Tax, Stamp Duties, Import and Export duties.
Lastly, Tax base further comprises of capital base, income base and consumption base.
Capital base include Capital Gains Tax. This is on the sale of capital goods (noncurrent
asset). Income base include: Personal Income Tax, petroleum income tax and Company
Income Tax as the name implies the income of the government is being taxed upon. The
examples of the case of consumption are value added tax, stamp duties and excise duties. 5

3.0.3 Objectives of Nigerian Tax System
There are certain objectives which the tax system is expected to achieve. These
objectives include: Promoting fiscal responsibility and accountability:
One of the primary objectives of the National Tax Policy is to create a tax system
which ensures that the government transparently and judiciously accounts for the revenue it generates through taxes by investing in the provision of infrastructures, public goods and services. Where this is in place, Nigerians would have a tax system that they can fully relate to and which is a tool for national development.
Facilitating economic growth and development:
The overriding objective of the Nigerian tax system should be to achieve economic
growth and development. As such, the system should allow for stimulation of the economy and not stifle growth, as it is only through sustained economic growth that the potential ability to offer improvements in the well-being of Nigerians will arise. The tax system should therefore not discourage investment and the propensity to save. Taxes should not be a burden,
but should be applied proactively with other policy measures to stimulate economic growth and development.
To provide the government with stable resources for the provision of public goods and
services:

5 Godwin Emmanuel Oyedokun, “Overview of Taxation and Nigerian Tax System”, Research gate. January, 2020, PP 1-53. Pg. 309.For Nigeria to pursue an active development agenda and carry out the basic functions of government, its tax system should generate sufficient resources for government to provide basic public goods and services (e.g. education, healthcare, infrastructure, security etc.). It is
therefore a primary objective of taxation to provide the government with resources that it shall invest in judicious expenditure that will ultimately improve the well-being of all
Nigerians. To address inequalities in income distribution:
Nigeria’s tax system should take cognizance of our peculiar economic circumstances and
seek to narrow the gap between the highest and lowest income groups. Those with the highest incomes should pay the highest percentage of tax and tax revenue should be utilized to provide Nigerians with affordable social amenities, basic infrastructure and other utilities.
To provide economic stabilization:
Nigeria should use its tax system to minimize the negative impacts of volatile booms and
recessions in the economy and also to help complement the efforts of monetary policy in
order to achieve economic stability.
To pursue fairness and equity:
Nigeria’s Tax system must be fair and shall institutionalize horizontal and vertical equity.
Horizontal equity ensures equal treatment of equal individuals. The Nigerian tax system
should therefore seek to avoid discrimination against economically similar entities. Vertical equity on the other hand addresses the issue of fairness among different income categories. In this regard, the Nigerian tax system shall recognize the ability-to-pay principle, in that individuals should be taxed according to their ability to bear the tax burden. Individuals and
entities that earn high incomes should pay a corresponding high percentage of tax. The
overall tax system shall therefore be fair, so that similar cases are treated similarly. In
addition, any ambiguity or conflicting provisions in the law shall be resolved in a manner as to ensure fairness to the taxpayers and the tax authorities.
To correct market failures or imperfections:
One of the objectives of the Nigerian tax system is the ability to correct market failures in cases where it is the most efficient device to employ. In this regard, taxes may be reviewed upwards or downwards as may be necessary to achieve government’s intentions. Market failures which the Nigerian tax system may address are those that are as a result of externalities and those arising from natural monopolies.

4.0 National Tax Policy
Tax policy is the choice by a government as to what taxes to levy, in what amounts, and on whom. It has both microeconomic and macroeconomic aspects. The macroeconomic aspects concern the overall quantity of taxes to collect, which can inversely affect the level of economic activity; this is one component of fiscal policy. The microeconomic aspects concern issues of fairness (whom to tax) and allocative efficiency (i.e., which taxes will have how much of a distorting effect on the amounts of various types of economic activity).
According to the National Tax Policy for Nigeria, the Nigerian tax system is expected to
contribute to the well-being of all Nigerians and the taxes which are collected by government should directly impact on the lives of the citizens. This can be accomplished through proper and judicious utilization of the revenues collected by the government.

5.0 Tax Laws
There are several tax laws that regulating the administration of tax in Nigeria. These includes, Companies Income Tax (CIT), Personal Income Tax (PIT), Value Added Tax (VAT),Custom and Excise Duties, Petroleum Profit Tax (PPT) and Stamp Duties Act.
Firstly, Companies Income Tax (CIT) is a tax imposed on profit of a company from all
sources. It is one of the main taxes administered and collected by the Federal Inland Revenue Service (FIRS). 6 It is a tax paid on the income of incorporated companies. Company’s Income taxes are regulated by the Companies Income Tax Act (CITA), Cap. C21, LFN 2004 (as amended). The rate on this tax is 30% of a company of total profit less all expenses for the period which a company reasonably incurred in generating the taxable profit.
Secondly, Personal Income Tax (PIT) is imposed on income of individuals (employees),
corporate sole or body of individuals, communities, families or trustees or executors of any settlement as the case may be. It also covers taxation of sole traders, partnership assessment, and taxation of estates. PIT is regulated by the Personal Income Tax Act Cap P8 LFN 2004
(as amended). The relevant tax authority responsible under the law to administer this type of tax may vary from the FIRS to the various State Boards of Internal Revenue.

6 Section 1 of Companies Income Tax Act (CITA).

Thirdly, Value Added Tax (VAT) 7 is a tax charged on the sale of specified goods and services at the rate of 5%. It is also referred to as a consumption tax and it is mostly borne by the final consumer. The FIRS is vested with the power of administration and management of VAT in Nigeria. It is regulated by the VAT Act and the VAT (Amended) Act 2007. The Federal Government of Nigeria approved a 50% increase in VAT for supply of goods and services, from 5% to 7.5%. which took effect from 2020.
Fourthly, Custom and Excise Duties 8 are taxes charged at the Nigeria’s Port of Entry on
certain imported goods. It is usually administered and collected by the Nigerian Customs
Service by virtue of the Customs and Excise Management Act. There are two types of taxes charged at the Nigeria Port of Entry; one is in certain imported goods and the other is on some exported good. Thus, custom and excise taxes are imposed on goods either for revenue purposes or to discourage consumption of such products. This is why it is a times referred to as consumption tax.
Fifty, Petroleum Profit Tax (PPT) 9 is imposed on income of companies in petroleum
operations (Upstream). The tax is governed by the Petroleum Profits Tax Act, Cap P13 LFN 2004 (as amended). Companies liable to PPT are not liable to Companies Income Tax (CIT) on the same income.
Lastly, the Stamp Duties Act 10 regulates stamp duties in Nigeria. Stamp duties due from individuals are paid to the respective State Government, while corporate bodies pay theirs to the Federal Government. The stamp duties rates applied by FIRS are in two forms, namely; flat rate charges and ad valorem charges. In line with the Federal Inland Revenue Service (Establishment) Act, FIRS is empowered to administer taxes for stamp duties listed in the first schedule to the Act. It is also administered by the respective States Internal Revenue Services (IRS)

6.0 Organs of Tax Administration
The FIRS is the body statutorily empowered to administer and enforce the various tax laws in Nigeria at the federal level. The States’ Governments administer tax through the various State Boards of Internal Revenue, while the Local Government Revenue Committee of each State
7 Cap. V1 Volume 15 LFN 2004 ( as amended)
8 Act; Cap 45 LFN, 2004 (as amended)
9 Cap. P13 Volume 13 LFN 2004 (as amended)
10 CAP. S8 LFN 2004 (as amended)

administers taxes at the local government areas. The principal functions of the FIRS are: (a) assess persons including companies, enterprises chargeable with tax; (b) assess, collect, account and enforce payment of taxes as maybe due to the Government or any of its agencies;
(c) collect, recover and pay to the designated account any tax under any provision of this Act or any other enactment or law. 11
Also, there is a Joint Tax Board (JTB) which is a creation of Personal Income Tax Act. It is made up of officers of the Federal and State tax authorities. It serves as a big umbrella covering all tax authorities in Nigeria. The official role of the JTB remains purely advisory.
The Finance (Miscellaneous Taxation Provisions) Amendment Decree No.3 of 1993 made
provision for the establishment of an operational arm known as the State Internal Revenue Service. It must be noted that section 87 of PITA establishes the State Board of Internal Revenue. This body is charged with the duty amongst many others, to ensure the effectiveness and optimum collection of all taxes and penalties due to the Government under the relevant tax laws; Doing all such things as may be deemed necessary and expedient for the assessment and collection of the tax, accounting for all amounts so collected in a manner to be prescribed by the Commissioner.

7.0 Conclusion
Taxation is a lucrative area through which the government gets revenue for the betterment of the society hinged on improving the standard of living. There are several tax laws regulating the dissemination and disbursements of tax in Nigeria. There are also, several bodies empowered to administer the enforcement of these tax laws.

11 Section (8) (1)(a)(b) and (c) of the Federal Inland Revenue (Establishment) Act, 2017.