AN APPRAISAL OF TAX ADMINISTRATION AND ITS CHALLENGES IN THE NIGERIAN PETROLEUM INDUSTRY

Abstract

Nigeria is richly blessed with numerous mineral resources of which crude oil ranks highest. This accounts for the great dependence of the nation’s economy on oil revenue. Petroleum taxation is a major source of oil revenue in Nigeria. The objectives of taxation; petroleum taxation in particular are numerous. Apart from being a source of revenue for government funding and provision of essential services for the citizenry, it acts as a tool for wealth distribution between the wealthy in the society and the poor. Despite the foregoing objectives of Petroleum taxation to the nation’s economy, several factors abound that militate against the effective collection and administration of Petroleum taxation. These factors result in a huge decline in the expected revenue from petroleum taxation and also inhibit the effective maximization of revenue accruing from petroleum taxation for the benefit of the nation. Hence, the main focus of this research is to analyse the legal and institutional framework set up for the administration of Petroleum taxation in Nigeria, with the aim of proffering solutions to the challenges that plague the administration of taxes in the petroleum industry. In carrying out this research, the researcher adopted the doctrinal method and also employed a combination of the theoretical and analytical approach. Data was majorly collected through secondary sources and reference was made to statutes, law textbooks, notable judicial pronouncements, scholarly articles in local and international journals, and resources on the internet. It was found that some of the provisions of the existing laws in the area of petroleum taxation are ambiguous, obsolete and ineffective. It was also found that tax evasion, corruption by tax officials, public officers, and politicians have short-changed the nation’s economy in the area of revenue derived from the taxation of petroleum operations. The lack of skilled tax officials and their lackadaisical attitude towards work and self-improvement also creates a bottleneck in the effective and efficient tax administration. In the light of the forgoing findings, the researcher recommended that Measures should be put in place to ensure regular update of tax laws in Nigeria, to cater for recent developments. Tax evasion and corruption should be duly prosecuted and severe punishments meted out to offenders to serve as deterrent to other tax payers. Furthermore, the process of recruiting and promotion of tax officials should be characterised by transparency and based on merit rather than favouritism and other irrelevant factors. This research is a contribution to the body of literature in the area of Petroleum tax administration, and constitutes a springboard for future research in the subject area.