Since the past years, none of the students of the department of Accounting either NCE or B.Sc. has made any write-up on the topic Nigeria Tax system. In view of this, it is important and necessary to let students of Accountancy Department and necessary and other Department to know the importance of tax system in the Development of Nigeria economy. This has become imperative because of the ignorance of people on the importance of Nigeria Tax system, which has been a hindrance to the economic development. People usually feel cheated when asked to pay up their tax liabilities. If people are aware of the aims, objectives and contribution of the Nigeria tax system to the economy, they will not feel reluctant to discharge their civic responsibilities while the government will not hesitate to provide the masses with vital social amenities.










1.1 Background to the Study

1.2 Statement of the Problem

1.3 Objective and Purpose of the Study

1.4 Scope of the Study

1.5 Research Methodology

1.6 Statement of Hypothesis

1.7 Definition of Terms

1.8 Organization and Plan of the Study

1.9 Limitation of the study



2.1 Definition of Taxation

2.2 The various Types of Taxes

2.3 Theoretical Aims and Objectives of Taxation

2.4 Miscellaneous Taxes

2.5 Assessment Procedure

2.6 Problems of Tax Collection in Nigeria



3.1 History of the Kwara State 

Board of Internal Revenues

3.2 Organization structure of the Board

3.3 Objectives of the Board of Internal Revenue

3.4 Mode of Data Collection

3.5 Hypothesis Testing 



4.1 Data Analysis (PAYE and Direct Assessment)

4.2 Other Revenue Sections

4.3 Contribution of Tax to the Nigerian Economy

4.4 Findings



5.1 Summary

5.2 Conclusion

5.3 Recommendation



A. Letter of Introduction

B. Questionnaire



The existence of taxes had been before the colonization of African countries. Taxes existed in Africa for the common benefits of African populace.

In Nigeria taxes were paid and were properly recognized then and there were few cases of tax evasion and tax avoidance.

Though, compared with what we have now taxes realized then were relatively small but sufficient for the need of the society as at that time.

However, what we have in Nigeria today Is to a large extent an offspring of the British tax system, inherited from our colonial masters.

For example taxes were prominent In the northern part of Nigeria before the colonial era, by the way of rendering free services such as clearing of bush, digging of wells, digging of pit toilets, etc. all these were recognized as taxes for the benefits of the community as a whole.

Cattle rearers and citizens even went to the extent of giving cows and horses so that community could sell them and use the proceeds for the economic development of the community.

There were laws or regulations guiding the procedure, then and even if there were any, they where not on record today.

In those days, the obas, Emirs and obis were appointed and recognized as commissioners for tax purpose which is now equivalent to the modern commissioners for finance and ‘revenue. These chiefs would in turn appoint ward chiefs who would be operating under their authority. Also, the ward chiefs would appoint family heads to carry out any responsibilities given to them.

Any matter which could cause delay in tax administration would be jointly decided by the Oba, Emir or obi and his council of’ chiefs and the Oba, Emir or Obi are usually the chairman of such a panel or meetings. The system ha know been adopted by: the joint tax board with some moderation as the letter is not the combination of chiefs but a combination of different professionals from’ different fields of human endeavour.

If one views the system of tax administration during pre-colonial period, there taxes collected at times, could be less than expresses incurred during the process of collection.

Also, there were few cases of tax evasion and tax avoidance could be attributed to the level and standard of education. People are now educated and so they now know how to avoid and evade tax cleverly.

However, with all this above mentioned points, the pre-colonial tax system has its disadvantage because this custodian of this money could easily run away with it or misappropriate part of the whole money or it may be stolen there were banking in those days.

Secondly, some family head were assigned to collect the tax liabilities of their wards. They could not do much in collecting the taxes from their family members who refuse to pay. They may even except their own immediate families from paying tax.

In view of those problems and disadvantages, in 1904 Lord Lugard introduced community income tax into Northern Nigerian. It is important to mention here that Nigeria tax system as it is today is an offspring of the British tax system.

Though further changes and amendments were made in the 1904 tax, which result to the native Revenue ordinance in 1917, 1918, it was extended to the southern part of Nigeria.

It was in operation in Abeokuta in Ogun State and Benin City in Edo state. In 1928, the provision was extended to the introduced as income tax on the income of individual trade,’ vocation or profession. This was however limited to profit withdrawn by the owners.

The company income tax was enacted in 1943 while the Nigerian income tax was also enacted in 1940. the tax laws and the administration of tax was not met with joy by Nigerians as the colonials masters encountered great problems in executing most of those tax laws. Were not proper and should annulled, consequence of which riot erupted. The same thing happened in the western state in Abeokuta. This was a way showing the dissatisfaction of the people with the tax laws and many women and children died in the two riots. 

Since 1943 there had been some other legislation which is still relevant today. These modern ‘legislation are up to date for the modem economic system. 


The paramount problem that calls for this study Is the general unawareness of the citizenry about the importance and contribution of taxes to the economy.

Also, major problems being faced by the board of Internal revenue which reduces the revenue generation capacity of the government Include the following:

a. Shortage of working facilities, such as vehicles, strong safe and cabinet etc.

b. Manpower problem which has to do with shortage staff. Illiteracy among taxpayers which impedes communication with them.

c. Some taxpayers don’t keep proper record of account and assessment of such taxpayers is based on the judgment of tax officials

d. Tax evasion and tax avoidance

e. Sometime, the statistics departments rely on this market women Information, which may be wrong.

f. Some tax collectors were not fully trained In the field so they are ineffective when carrying out their duties

g. Some employers of labour do not always corporate with the tax authority in respect of paye system of their employment and this also occurred in the limited liabilities companies which makes it very difficult for the board of internal revenue to assess their tax liabilities.

h. Fraudulent practice & by some tax collections


i. The primary objective of this study is to sensitize the citizenry about the Importance and contribution of taxes to the economy of Nigeria as well as to let them now the need to pay their taxes promptly.

ii. To proffer solutions to the obstacles often faced by tax collectors and the payer in the country.

iii. To study how revenue is raised for finance of government expenditure.

iv. To know resources are transfer from the citizens to the government.

It is the main purpose of the study to let students and non students know the role, contributions and importance’s of taxation to the economic development of the country.

This is because of the ignorance of this people on the importance of Nigerian tax system which has caused low revenue generation to the government and consequently a negative effect on economic development.

Many find it difficult to know the importance of taxation arid feel cheated when ever they are asked to pay. Up their tax liabilities.

People will not feel reluctant to discharge their civic responsibilities if they are aware of this system and contribution of Nigeria taxes to the development of the economy.

In other words, proper awareness of the people about the tax system and its contribution to the economy of the county will make them discharges their civic responsibilities with enthusiasm.

Hence, government would not hesitate to provide the Masses with vital social amenities, which will definitely lead to economic growth and development.

However, an important purpose is to focus on the areas of difficulties with a view to providing them with possible solutions.


The study is primarily designed to look at the areas of difficulties in order to find the means of bringing them out for possible solution.

Government has many ways of generating revenue through taxes. This study is however restrained to the taxes generated by the stare board of internal revenue which is majorly the personal income taxes of individual is working .either with the government or in the private establishment.

One of the factors determining the revenue generating capacity of the government is the administrative competences of the tax colleting organs of the government, that is the board of internal revenue in this case.


Research works are carried out using various research methods. These include the primary and secondary sources of data. These sources have been employed in collecting the information used in the study. 

The primary data used are questionnaire as well as interviews. While the secondary data used are from text books journals and other publications. 


The following hypotheses were developed and tested to determine the importance of different taxes to the state revenue:

a. Taxation in Nigeria has been the pivot on which this Nigeria economy revenues.

b. Among the various taxes, Pay As You Earn (PAYE) is the easiest to collected and it also contributes to the revenue. Tax is a necessary ingredient for civilization


PAYE  (Pay As You Earn): System of taxation whereby people are asked to pay a tax liability proportionate to their earnings are of internal, revenue: This is a statutory body, created by the enactment of edict No. 9 of 1984 saddled with the responsibilities of administrating the tax system of the state.

Tax Avoidance: This is the act of reducing tax liability by tax payer, by taking advantage of loopholes in tax laws.

Tax Evasion: This refers to illegal act of refusing to pay tax at all Tax collectors: These are the people appointed by the government to collect tax on their behalf.

Citizenry: These are people staying in a country which may be by birth, naturalization and honorary.

Tax Authority: this is the body vested by the law to make law’ performing to tax collection.


Plan of the study starts with the background of the study the problem of the study, objective and’ purpose, scope and limitation of the study, research method employed in coBectin9 data and the definition of terms.

It also includes the summary and recommendation.

Chapter one deals with the background of the study statement, of problem, objective and purpose’, and limitation and definition of terms.

Chapter two deals with literature: review definition of taxation, types of taxes theoretical aim and objective of taxation, miscellaneous taxes, procedure for assessment and problems of tax collection research methodology and cases study.

Chapter three is on research method and case study, history of Kwara State Board of Internal Revenues, structure of the board, the objectives of the board, and testing of hypothesis, limitation of the study.

Chapter four deals with data presentation and analysis other revenues sections and findings.

Chapter five contains the summary, conclusion as well as recommendations.


Limitations encountered in the course of this study is primarily the time constraint as the stipulated time for the submission of the project is not sufficient enough for through and deep research into the subject.

Also, there is difficulty of finance, lack of co-operation from the officers in charges as regard disclosure of needed data.



In 1906, the colonial government under the leadership of Lord Lugard first introduced direct taxation to the former Northern Nigeria.

Prior to that time there had .been an elaborate system of taxation of the administration of the powerful emirs. We later made changes which appear in the native, revenue ordinance of 1917 which later extended to southern Nigeria in 1918.

However, after much was duely enacted native in 1929 to apply to the eastern province and Asaba division and to be effectives from the 1st of April 1928.

However the present Nigeria taxation system began in 1940 when the native revenue ordinance taxation ordinance No 4 of 1940 was enacted. A more comprehensive. One was passed in 1963 to replace the 1940 ordinance. Through there was no other serious change until 1956.

Prest (1975) notices that “there were four major problems that caused the radical difference in performance of taxation in the developing countries despites of long time of existence.



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