AN ANALYSIS OF THE LEGAL FRAMEWORK FOR THE ADMINISTRATION OF COMPANIES INCOME TAX IN NIGERIA

Abstract

The Companies Income Tax Act is the principal law that regulates the taxation of companies in Nigeria. The tax regime in Nigeria is a multi-level tax system, which simply means that taxation is administered by the three tiers of government. The Federal Inland Revenue Service (FIRS) administers or oversees the income tax for companies. Companies income tax is a tax on the profits of registered companies in Nigeria. It also includes the tax on the profits of foreign companies carrying on any business in Nigeria. The Companies income tax is paid by limited liability companies inclusive of the public limited liability companies[1]. This paper explores the nature of companies’ income tax in Nigeria, its legal framework and administration. Attempt is made to concisely analyze companies income tax, the issues and challenges surrounding assessment and collection of companies income tax. The paper found out that the issue of multiple taxation, tax evasion, corruption amongst other challenges have affected negatively the output of companies income tax. This paper therefore recommends that the various tiers of government should adhere strictly to the taxes they are legally empowered to collect. Where there are serious incidences of multiple taxation it discourages investors who want to maximize profits and will make companies to move their business out of the state with the attendant consequence on the revenue output of the state. The FIRS should also step up their administrative strategy to combat the incidence of evasion by companies and also to block other means of tax revenue leakages. The legislators should as a matter of urgency amend the Companies Income Tax Act, to impose a stiff penalty for failure to pay taxes by corporate bodies as this will discourage non compliance with payment of taxes by some companies.