Taxation in Nigeria:
an evaluation of the impact of the Companies Income Tax Act
Senior lecturer Matthew Enya NWOCHA1
This Paper is written again st the background of the need to strengthen Nigeria’s
tax laws for optimum contribution to public reven ue and economic dev elopment in an era
of widespread tax evasion and economic recession. The Paper has found among other
things that defects and loopholes that exist in the Companies Income Tax Act (CITA) is the
occasion for widespread tax evasion, the arbitrary and discriminatory application of the
Act, and the political manipulation of the process. The result is that the Act is completely
encumbered in achieving its objectives. To eliminate these encumbrances, the paper has
recommended, among other things, the amendment of the law to place the wide
discretionary powers of the president to impose on or exempt companies from taxation
under the supervision and authority of the National Assembly and to place the powers of
the Federal Board of Inland Revenue to distrain properties of defaulters under the
jurisdiction of the courts.
Keywords: tax laws, economic development, recession, investments, civil liability.
JEL Classification: K22, K34
Worldwide, governments levy tax for a variety of reasons. Principal among
them are to raise public revenue needed for assorted public expenditures and,
secondly, to balance the sectoral development of the economy. The tax laws
operative in Nigeria are the Stamp Duties Act, 2 Petroleum Profits T ax Act,3
Customs and Excise Management Act,4 Casino Taxation Act,5 Income Tax
1 Matthew Enya Nwocha - Head of Postgraduate Studies, Faculty of Law, Ebonyi State University,
Abakaliki, Nigeria, email@example.com
2 Commencement date of the Act is 1st April, 1939.
3 Commencement date is 1st January, 1958. The Act has been amended by the Petroleum Profits Tax
(Amendment) Act, 2007.
4 LFN, 2010. Excise duties were traditionally considered indirect taxation, due - in principle – for
selling certain consumer goods, usually considered luxury. Economic theory recommends excise
duties on goods with inelastic demand. In these circumstances, taxes price increases on excise
goods does not cause significant reductions in the consumption of these goods, so budget revenues
from excise duties are relatively stable. The scope of these special charges of consumption is
particularly vast and it varies from country to country and includes mainly: alcohol and soft drinks,
wine, tobacco products, gasoline, diesel, tea, coffee, soft drinks, cars, furs, jewelry, cosmetics etc. –
see Mihaela Tofan, Excise Duties in European Union. Relevant National Case-Law, in Cătălin-
Silviu Săraru, Contemporary Challenges in the Business Law, Adjuris - International Academic
Publisher, Bucharest, 2017, p. 135.