From the inception of modern taxation in Nigeria in the first decade of the 20th century the problem of poor tax administration has been the cankerworms that militate against an optimum revenue generation which affect negatively the government ability to render essential services to the citizenry. The problem of the attitude of most tax payers in Nigeria is negative. Most of the people, feel that tax imposed on them by the government is a means to exploit their limited resources for their personal use. With this impression, they see no reason why they should comply in paying such taxes. They would therefore prefer to devise any method to evade or avoid taxes. The government and the tax authorities on the other hand, have made very little effort in educating tax payers, especially those from the rural areas to understand that such taxes are used for their benefit in assisting the government in providing social amenities or public utilities such as education, defence, health, communication, infrastructures and many others that yield no revenue, which are supposed to be financed by the government with the citizen fulfilling their civic duties. With the above problems in mind, various reforms were initiated aimed at educating the taxpayers on their civic obligation to pay their taxes which will help government to raise revenue in order to provide the most needed infrastructures for the public good, to further examine the possible ways to educating tax payer on the importance of tax compliance and enforcement so as to encourage them on performing this civic responsibility place on them. This work is intended to cover the general background of income tax administration in Nigeria. The scope will be base on methods of assessment to personal income tax and collection by the avoidable administrative machineries. The work is limited by the non-doctrinal method of research that would have involved the conduct of interviews and the administration of questioners. Indeed, because of lack of time, the researcher was unable to do that. This study assesses the income tax enforcement and compliance efforts under the Nigerian Income tax laws. In assessing these penal provisions, the weaknesses of our taxing provisions shall be examined analysed and processed with a view to making laudable suggestions and recommendations that will improve revenue generation in Nigeria. The research project concludes that the tax authorities and the government should educate the taxpayers on their civic obligation to pay their taxes because, voluntary tax compliance by the tax payers is hardly possible under a condition in which the public have no confidence in the revenue officials. The importance of tax and the issue of tax as a source of government revenue must be pointed out to both the government and the governed should be talked about also. Hence, all hands must be on deck for the country to achieve great percentage of tax compliance from the taxpayers.

CHAPTER ONE: INTRODUCTION

1.1       Background to the study
Taxation may be defined as the demand by the government of a country on its citizens for a compulsory payment of part of their wealth. The aim of taxation is to raise revenue to finance government expenditure to achieve economic development and to distribute income on a socially acceptable basis. Hence, the first need of a modern government is revenue which is indeed the breath of its nostrils1. Expenditure has shown that connection is not a simple task, especially in developing countries like Nigeria where its economics, social and political structure is so complicated. Tax has to be collected with caution as voluntary compliance is lacking. Income tax and every other form of taxation have not being readily accepted and even where it is accepted, it is not favoured. Members of the public are usually touchy about forms, notice and letters tax authorities. The result is an attempt to create or avoid taxes as much as possible, causing a low rate of the compliance.
It is necessary at this juncture to distinguish between: ?tax evasion? and ?tax avoidance?, either of which could be the result of non compliance with payment of ? tax evasion is usually defined to mean the failure to pay one‘s tax or the reduction of one‘s tax liability through illegal or fraudulent return or failure to make a return or even failure to pay on time. Evasion is not only wrong, but also it involves breach of tax laws. Ola C.S, opined that:
Tax avoidance is the minimization of tax liability by arranging one‘s affair as to take advantage of provision in the tax law.2In this way the tax payer pay less than otherwise would have been payable.
Income tax is wholly the creature of statute. That is to say, there is no common law of taxation. No principles of law are applicable other than those principles, which are found in the taxing Acts themselves according to their true meaning and effect. In any tax case, it is consequently necessary for the court or tax commissioners to determine the true meaning and effect of the particular statutory provisions in question. The actual problem in connection with tax administration is that of enforcing tax payment. It is against this background that the Personal Income Tax Act of 1993 (as amended) as well as Companies Income Tax Act of 1990 (as amended) made penal provisions against any violations of their provisions. These are categorized into civil and criminal offences and penalties.
The Personal Income Tax Act3, (P.I.T.A) for instance, lays down income tax offences and penalties for their breach, such as legal proceedings, distraint of property, public auction of seized properties and monetary penalties for various income tax offences.4 Likewise, part XXI of Companies Income Tax Act (C.I.T.A) 1990, (as amended) listed various offences and penalties against any tax defaulter such as failure to comply with the provisions of C.I.T.A or rules, failure to comply with notices or summons, failure to answer questions on tax matters, failure to furnish returns, statement, information or keep correct records of income.5
Preliminary examination of these penal provisions reveal their ineffectiveness to check the activities of tax defaulters. This study is to examine and analyse the penal provisions with a view to suggest better methods of making effective penal provisions in our tax statutes.
The present penalty provisions do overlap and are in some places mutually inconsistent especially in terms of the severity of the penalties and are thus defective and ineffective to deal with current economic trends in our fiscal policies. This calls for thorough review and re- arrangement of the penalty provisions on a more adequate and rationale basis.
Additionally, the attitude of the tax officials, the law makers and the courts leaves much to be desired as a result of their lukewarm behaviour towards tax offences. This adversely affects income tax compliance efforts.6 The courts responses are usually slow and are passive in taking decisions.7 Thus, even though the law provides sanctions against those defaulters, these provisions are hardly used by the tax officials.8
Enforcement of income tax in Nigeria; which is the aim of this research can be well understood if considered into parts: Firstly, with regards to the tax payer and secondly, with regards to the Nigerian tax administration system.

1.2       Statement of the Problem
Considering the nature of the Nigerian society, one can highly say, this contributes highly to the manner to which income tax enforcement is treated in Nigeria. Thus, problems of this study hinges on the following areas:
Why do the citizens of Nigeria have an unpatriotic tendency towards tax payment. The general behaviour of some tax payers as well the rate of poverty in the country may be responsible for the effect given to income tax enforcement and compliance in Nigeria.
The problem of the attitude of most tax payers in Nigeria is negative. Most of the people, feel that tax imposed on them by the government is a means to exploit their limited resources for their personal use. With this impression, they see no reason why they should comply in paying such taxes. They would therefore prefer to devise any method to evade or avoid taxes.
The government and the tax authorities on the other hand, have made very little effort in educating tax payers, especially those from the rural areas to understand that such taxes are used for their benefit in assisting the government in providing social amenities or public utilities such as education, defence, health, communication, infrastructures and many others that yield no revenue, which are supposed to be financed by the government with the citizen fulfilling their civic duties. Thus, from the above problems, the following research questions comes to mind:
a.         Why is there low tax compliance efforts by the tax payers in Nigeria?
b.         Why do the taxpayers engage in tax evasion and avoidance?
c.         Why do the government and tax authorities not really serious in educating the taxpayers about the importance of tax payment to generate revenue that will be beneficial to the Nigerian society as a whole?

1.3       Aim and Objectives of the Study
The aim of study, is to determine the problem associated with enforcement and compliance of income tax in Nigeria and propose useful system that will reduce to a great extent, these problems through the following objectives:
a.         To educate the taxpayers on their civic obligation to pay their taxes which will help government to raise revenue in order to provide the most needed infrastructures for the public good.
b.         To further examine the possible ways to educating tax payer on the importance of tax compliance and enforcement so as to encourage them on performing this civic responsibility place on them.
c.         To examine the ways in which the government and tax officials can be made to intensify tax enforcement and compliance efforts in Nigeria so as to improve revenue generation.

1.4       Scope of the and Limitations of the Study
This work is intended to cover the general background of income tax administration in Nigeria. The scope will be base on methods of assessment to personal income tax and collection by the avoidable administrative machineries. The research has also gone further to proffer some possible methods of income tax administration on which will be a solution to the problems faced by the tax administrative bodies, that will also enhance tax compliance by the various taxable bodies or person(s). The work is limited by the non-doctrinal method of research that would  have involved the conduct of interviews and the administration of questioners. Indeed, because of lack of time, the researcher was unable to do that. The researcher state that the quality of the work has not been affected in any way even with these constraints.

1.5       Significance of the Study
This study is very important and significant because it touches on sensitive areas of the Nigerian income tax regime such as the penal provisions dealing with civil and criminal sanctions.
The study is also significant because, it assesses the income tax enforcement and compliance efforts under the Nigerian Income tax laws. In assessing these penal provisions, the weaknesses of our taxing provisions shall be examined analysed and processed with a view to making laudable suggestions and recommendations that will improve revenue generation in Nigeria.
Since taxation is strictly statute based and mandatory for all taxpaying persons earning any income in Nigeria, the study is justified in the sense that the taxpayers will see the rationale for paying tax and will appreciate the reasons behind the imposition of heavy penalties for the breaches of tax laws.
In this study, we shall be able to know what happens to those persons who refuses to pay tax? Thus, the tax payers will understand the dangers involved in failure to pay tax which result in heavy penalties. They will also be willing to pay their taxes as and when due and the revenue officials will find it easy to collect taxes. This will in turn, improve the revenue of the government through taxes.
Likewise, the tax policy objectives of the Federal government centres around the best ways to make the tax system more efficient and improve the revenue base by diversification of the economy to foster economic growth and check negative tax compliance efforts justifies the research in this area. This is because there is no how the government can achieve the above objectives without making proper tax legislation that will not only encourage people to pay their taxes, but also to deal with the basic problems of tax evasion and tax avoidance.

1.6       Research Methodology
The method chosen in this research is doctrinal. This includes statutes and case law as the primary sources as well as the secondary sources such as academic materials available in the libraries such as text book, written by various authors, articles and seminar papers, gazettes and internet on the subject matter, and other relevant materials on the subject matter.
These become necessary because it would help us in achieving understandable base on the perspective of the tax payer which we would try to compare with opinion of some writers and that of the position of the law. This method used, will aid us in providing possible remedies, also to agree or not with the comment that says, most of the problems associated with income tax compliance lies with the law and taxing authorities than the taxpayers9.

1.7       Literature Review
The topic of research which analyses the income tax compliance effect in Nigeria is a topic which has attracted the attention of many writers and also legal authorities which have provided methods through which this tax can be administered.
For instance, Ola C.S,10 posit that the Personal Income Tax Act identifies taxable person and determine their assessment income. This is achieved by determining the resident of the taxpayer and the source or origin of his income. Ayua I.A further explains the meaning of residence by the Act as living in a particular locality and it is possible that a person may have  two places of residence. Residence therefore is the idea of renaming and setting in a place for a fairly long period11.
What can be deduced from the above statement is; one can be a taxable person where the law has said he is a taxable person and such personal income to be taxed, must be those contemplated in the law. It is the attempt of this study to further assess the various taxable persons provided by the law and to move a step forward on the work of the writings in finding some problems that are associated with such persons whom are taxable in term of assessment and collection.
Some additional materials on Nigerian income tax policies, both at the federal, state and local government, collated and presented in a coherent whole, are provided in  a special edition by the Nigerian institute of advanced legal studies, Lagos, under the authorship of Ajomo and Akanle12. In the book, several articles on Nigerian income tax were presented as part of the conference  series  of  the  institute.  Under  this,  we  found  interesting  topics  such  as:  ?the government,  the  constitution  and  the  tax  payers;?  ?An  analyses  of  federal  and  state  taxing powers?,  ?  Interpreting  and  understanding  Nigerian  tax  legislation?,.  ?Tax  administration;  the problems of assessment and collection,? ?A new framework for tax administration in Nigeria?, ?State  taxation;  the   problems   of   interstate   commerce   and   trade   and   federal  government instrumentalities?   and   ?Nigeria;   tax   treatment   of   business   concerns   with   international connection?; to mention but few.13 One key topic of interest to this research is; ?The socio- economic and legal foundations of tax evasion and tax avoidance.?14 These topics shall be analysed and used in the work. Even with this, there gaps to fill.
For instance, Arogundade, J. A. in his book: ?Nigerian Income Tax and its International Dimension,”15 explained the Nigerian income tax with international taxation. The book deals with international tax concepts and the Nigerian income tax principles; principle of law and practice of chargeable income determination in Nigeria; assessment determination and collection procedure in Nigeria and principle of double taxation avoidance.
For this research purpose, the book could have been useful when discussing international taxation and transfer pricing but he did not consider the Nigerian national tax policy This is because, the learned author only dwelt on transfer pricing and zeroed it on the practice in Nigeria. The learned author did not discuss the dispute resolution process as relates to transfer pricing which this study shall focus on.
Likewise, Arcotia, H. et al carried out extensive work in his article on a website entitled:
?Introduction to Transfer Pricing”16IBFD International Tax Academy. This was a seminar paper presented to the staff of the Federal Inland Revenue Service. It is a power point presentation that captures the legal framework of transfer pricing, process for setting and reviewing transfer prices, and transfer pricing adjustments and administrative approaches to avoiding and resolving transfer pricing disputes. However, the learned authors did not discuss Nigerian national tax policy and international tax regime. The issues treated are at variance with the subject matter of this study, neither did the authors aver their minds to the effect transfer pricing on international relations. This research work shall capture these important aspects within its ambit.
Avi-Yonah‘s   article:   ?International   Tax   as   International   law:   An   analysis   of   the International Tax Regime”17 is relevant to this study. The learned author in this article, argues that a coherent international tax regime exists, embodied in both the tax treaty network and in domestic laws and that it forms a significant part of international law (both treaty-based and customary). The author suggests that the practical implication, is that countries are not free to adopt any international tax rules they please, but rather operate in the context of the regime which changes in the same ways international law changes over time. Thus, unilateral action is possible, but is also restricted, and countries are generally reluctant to take unilateral actions that violate the basic norms that underlie the regime. He said nothing on Nigerian national tax policy. The learned author did not even discuss transfer pricing at all and the approaches to resolving disputes arising from transfer pricing were not discussed. This research work shall incorporate these topics, left out by the learned author in the article.
Another article on a website by Osadare, B. is entitled:“Taxation, Transfer Pricing and Conflict Resolution: Issues for the Extractive Industry”18 which is relevant. The learned author submits that the problem of taxation and transfer pricing is so sophisticated that many government of developing nations are far from finding a solution and their developed counterparts have been placed on edge by constantly reviewing their laws and regulations on taxation and transfer pricing. He notes that disputes relating to transfer pricing are now increasing and examines how the resultant disputes between MNEs in the extractive industries and host governments are resolved. The paper concludes that existing regulations are not enough in most cases and as a result of the serious tax implication, more attention should be given to it. But the learned author restricts his discuss to the extractive industries and fails to discuss the nature of Nigerian national tax policy as it affects international tax law. This study shall also focus on these areas.
Abdulrazaq‘s work entitled: ?Tax laws and foreign investment in Nigeria’19, is also relevant. He postulates that Nigerian tax statutes requires serious amendments to suit changing times, but he did not analyse the Nigerian national tax policy and transfer pricing at all. 20 Hence, this work is meant to cover such lacuna.
Umenweke‘s work entitled: 'Impact of tax statutes on investment in Nigeria'21is also relevant to this work. In t his book, the writer presented a clear picture on Nigerian tax  laws and its implication on foreign investment in Nigeria but said little or nothing on national tax policy. 22 Thus, due to the few literatures on this subject, it becomes necessary to pick a research topic from this area.
According to Adedokun23,the legal and institutional  framework  for  tax enforcement and their application to tax practice is as inequanon for effective tax administration. He also examined several mechanisms employed by the tax administrators in enforcement and recovery of tax in Nigeria, amongst which are distress, litigation, use of tax clearance certificate, monetary penalties and criminal prosecution and search and seize.
The work is a worthy contribution to knowledge in its treatment of the tax administrative machinery and enforcement agencies. However, these fail to address the recent important and far reaching reforms that have taken place in tax administration at the federal level as well as the challenges currently facing the Federal Inland Revenue. It is a gap that the research addresses.
The Nigeria Tax Law by Ayua24 is one of the oldest, detailed works on Nigerian taxlaw. It examines the structure of the Nigerian tax system from a legal perspective. These include Personal Income Tax and Companies Income Tax. The work is rich in its treatment of the rules for the interpretation of taxing statutes as well as in other aspects; however its limitations lie in the fact that, while it generally discussed tax administration, it did not  specifically treat  the issue of reforms. In addition, there have been far reaching reforms in Nigerian tax law and tax administration, since the publication of the work. Some of the tax laws have been repealed and several others enacted. Nevertheless, the work forms a useful foundation for any  legal discussion of tax matters in Nigeria.
Although Ojo,25 discusses tax from the accounting perspective, his  work  contains  issues of relevance to the law. His work, however, examines the basic principles of taxation in Nigeria amongst which includes various tax laws e.g. Value Added Tax (VAT),26 Stamp Duties Act, Petroleum Profit Tax, Personal Income Tax, Capital Gain Tax, taxation of companies, partnership assessment, taxation of non-residents, and administration of tax in Nigeria as well as the management of taxation in Nigeria.
Some of the topics in his work made a lot of references and quotations from the existing laws as at that time and these laws have been amended. For example, the former administrative machinery, which was the Federal Board of Inland Revenue (FBIR), has now been replaced with the FIRS and also the composition of each of these machineries has also been changed.  The work aids the researcher in appreciating circumstances and short comings in  the past system that led to present reforms27. With all these works, a huge knowledge gap exist and it is hoped that the present work will fill this yawning gap.

1.8       Organisational Layout
This essay contain six chapters, chapter one, provides a general introduction to the essay and gives a synopsis, of what the researcher seek to achieve, issues like problems associated with the research, aim and objectives of the study, literature review, scope of the study, method of research and organizational layout are discussed.
Chapter two deals with the definition of key terms, meaning of tax enforcement, objectives of taxation, Raising of Revenue, tax evasion and tax avoidance, Economic price stability, Redistribution of wealth, economic growth and development, meaning of income for the purposes of the taxing statutes.
Chapter three, is concerned with the income tax enforcement, interpretation of statutes on tax enforcement, personal income tax enforcement and compliance by tax payer, problems of income tax enforcement and compliance, problems of revenue tax authority, administrative cost of enforcement of income tax compliance.
Chapter four deals with the role of taxation in the economic growth and development by considering the organization of the recurrent and capital expenditure for revenue development. It also discussed the importance of taxation as it relates to income tax compliance and enforcement drive through good fiscal policies and incentives.
Lastly, chapter five consists of the conclusion, summary of findings, recommendations and suggestions.