LEGAL FRAMEWORK AGAINST TAX EVASION IN NIGERIA
To mitigate the negative effects of tax evasion, the Nigerian government has been taking steps to strengthen its tax administration, enhance compliance measures, and improve transparency. This regulatory and legal framework would be examined hereto as follows:
1. The Companies Income Tax Act (CITA) CAP C21 LFN, 2004: This act governs the taxation of companies operating in Nigeria. It prescribes the rules and rates for corporate income tax and provides for penalties for non-compliance and tax evasion.
2. The Personal Income Tax Act (PITA) CAP 8 LFN, 2004 (as amended): PITA outlines the tax obligations of individuals and how personal income tax should be computed and paid. It also stipulates penalties for tax evasion and non-compliance.
3. The Federal Inland Revenue Service (Establishment) Act: This act establishes the Federal Inland Revenue Service (FIRS) as the primary tax collection agency in Nigeria. The FIRS is responsible for enforcing tax laws and regulations, investigating tax evasion, and prosecuting offenders.
4. The Value Added Tax Act (VATA): VATA governs the collection of Value Added Tax (VAT) in Nigeria. It provides for the administration of VAT and penalties for non-compliance and evasion.
5. The Companies and Allied Matters Act (CAMA) 2020: CAMA regulates the operations of companies in Nigeria and includes provisions related to financial reporting, which can be used to detect tax evasion.
6. The Money Laundering Prevention and Prohibition Act 2022: This act includes provisions to combat money laundering and financial crimes, which are often associated with tax evasion.
7. The Nigerian Financial Intelligence Unit (NFIU) Act 2018: The NFIU is responsible for tracking and reporting suspicious financial transactions that may be indicative of tax evasion and other financial crimes.
8. The Economic and Financial Crimes Commission (EFCC) Act 2004: The EFCC is tasked with investigating and prosecuting financial crimes, which may include tax evasion.
9. The Tax Appeal Tribunal (Procedure) Rules, 2021: These rules are applicable to the Tax Appeal Tribunal, a specialized body for resolving tax-related disputes and appeals.
10. The Nigerian Customs Service (NCS) Act 2023: The NCS enforces customs duties and taxes, playing a crucial role in preventing tax evasion related to imports and exports.
11. Federal Inland Revenue Service (FIRS): The FIRS is the primary tax collection agency in Nigeria. It is responsible for assessing and collecting taxes, enforcing tax laws, and prosecuting tax evaders.
12. State Boards of Internal Revenue: Each state in Nigeria has its own Board of Internal Revenue, responsible for collecting taxes at the state level. They work in conjunction with the FIRS to ensure tax compliance.
13. Nigerian Customs Service (NCS): The NCS is responsible for enforcing customs duties and tariffs, which are a significant source of government revenue. It plays a vital role in preventing tax evasion related to imports and exports.
14. Economic and Financial Crimes Commission (EFCC): The EFCC investigates and prosecutes financial crimes, including tax evasion, money laundering, and corruption.
15. Independent Corrupt Practices and Other Related Offenses Commission (ICPC): The ICPC investigates and prosecutes corrupt practices, which can be closely linked to tax evasion and fraud.
16. Nigerian Financial Intelligence Unit (NFIU): The NFIU monitors financial transactions and reports suspicious activities, making it an essential agency in the fight against tax evasion and money laundering.