Legal mechanisms to counter tax avoidance in Nigeria
Abstract:Abstract
Taxation is one of the major sources from which the Nigerian government generates
its revenue which is by levying taxes on individuals, corporate entities, goods and
services. However, over the years, the Nigerian government’s revenue generation
efforts through taxation have been hindered and impeded by the issue of tax
avoidance. Tax avoidance, alongside other concepts such as tax evasion and tax
planning, has been described as fiscal termites eating away the potential tax
revenue of government. Unlike tax evasion and tax planning which are generally
considered to be illegal and legal respectively, there is no such clear cut
classification for tax avoidance thereby posing a serious threat to the government’s
revenue generation efforts. The magnitude of potential revenue lost to the menace of
tax avoidance necessitated the need for the government to put in place legal
mechanisms and measures to prevent tax avoidance. The objective of this article is
to examine the concept of tax avoidance and its underlying incentives. The article
also examines the impact of tax avoidance and as well as the legal mechanisms to
counter it. The article is a library based research that made use of primary and
secondary materials such as the constitution, tax legislations, case laws, journal,
textbooks, dissertations and theses. The finding of the article revealed that the legal
mechanisms to counter tax avoidance in Nigeria are currently inadequate and it
recommended that the legal mechanisms be strengthened for them to be effective.
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