Tax Policy in Nigeria

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A tax policies represent key resource allocator between the public and private sectors in a country. It is usually imposed on individuals and entity that make up a country. The funds provided by tax are used by the states to support certain state obligations such as education systems, health care systems, pensions for the elderly, unemployment benefits, and public transportation. A nation’s tax system is often a reflection of its communal values or the values of those in power. To create a system of taxation, a nation must make choices regarding the distribution of the tax burden-who will pay taxes and how much they will pay-and how the taxes collected will be spent.

In Nigeria, the taxation system dates back to 1904
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A thorough examination of the current national taxation policy reveal that it is comprehensive when compared with earlier attempts at designing a policy. However, there are some perceived challenges that this draft is likely going to face because of the experiences of past taxation laws. These challenges are as follows:
• Administrative Challenge. Experience has shown that the institutional capacity to administer taxes effectively is woefully lacking in this country. Procedures, reinforced by third party audits, appear to ensure that taxes are paid and received albeit with potentially serious and costly internal lags. However, Nigeria lacks capacity to assess the reasonableness of the returns submitted by taxpayers, including costs and staffing, skills, pay scales, and other funding, and computer and Information Technology (IT) infrastructure. Meanwhile the current draft has not put in place an administrative strategy.

• Compliance Challenges. A recurring problem with PIT Nigeria is the non-compliance of employers to register their employees and to remit
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