Determinants of Tax Non-Compliance in Nigeria

Abstract

Taxation has been an age-old means of revenue generation for governments of nations, which is used by governments to fund its programs such infrastructure, health care and provision of social infrastructure to citizens. Despite the importance of taxation, tax non-compliance places a huge bottle neck and hinders government effort to achieve this fundamental objective. Researchers agree that over 50 years of tax research has not resulted in a generalized solution to tax compliance issues and therefore recommend contextualised research on taxation to proffer solution to tax compliance issues. This paper therefore decided to investigate empirical research on determinants of tax non-compliance behaviour in Nigeria and determine if the align with factors stipulated by the economic deterrence model to ascertain whether economic deterrence factors are applicable within the Nigerian context with a view to proffering solutions to tax non-compliance issues. The paper seeks to answer three questions: what are the determinants of tax non-compliance in Nigeria? Are they the same as those stipulated by the deterrent theory? Can learnings from studies guided by deterrent theory be adapted within the Nigerian context? The research effort utilises a literature survey and analysis of content to arrive at an inference. The Survey reveals that deterrent factors such as tax rates, the benefits of tax evasion, the likelihood of fraud being detected, and the severity of penalties are major determinants of tax non compliance behaviour in Nigeria alongside other factors such as Tax Morale, Tax Education, Tax knowledge, Gender, Ability to pay, Quid Pro Quo, Tax System complexity, as well as attitude and perception . The study also confirmed that deterrent theory factors can be used within the Nigerian context by stakeholders such as Nigerian revenue services, tax practitioners and firm managers to formulate tax compliance strategies. The study recommends future studies and in-depth analysis on determinants of tax non-compliance behaviour in Nigeria for a more robust analysis.