EFFECT OF TAX AUDIT AND INVESTIGATIONS ON TAX ADMINISTRATION IN NIGERIA

Abstract

Tax revenue is one of the major sources of revenue to the government at all levels be it Federal, State or Local Governments. The primary and very vital function of taxation is to effectively raise revenue to finance government expenditures. The unprecedented increase in the number of tax frauds and evasions as a result of erosions in tax administration at all levels leaves much to be desired. The spate of tax frauds in Nigeria and the resultant repercussions on the tax revenue generating efforts of the government in Nigeria has brought a great deal of depletion in government tax revenue base and stagnation in developmental projects that are expected to be financed by such revenue. The massive tax frauds in Nigeria have brought bitter experiences for the economy and untold hardship to the government and citizenry. These challenging situations have made the application of tax audit and investigations techniques invaluable tools for closing up tax revenue leakages so as to boost the tax revenue base. Both primary and secondary sources of data collection were used. The non-parametric statistical tool was applied and the sample of the study is 105 staff of the Federal Inland Revenue Service out of 158 based on judgmental sampling technique. The findings showed that tax audit and investigations promote voluntary compliance and as such effective tax revenue generating and recovering tools. Secondly, it revealed that tax audit and investigations are investigative or diagnostic tools that facilitate effective tax frauds detection. Thirdly, the findings also showed that tax audit and investigations promote tax frauds prevention and reports obtained are used in courts of law as credible evidences against tax offenders. It is recommended that tax education or voluntary
compliance orientation for tax payers be done on a regular basis. Secondly, there should be regular, concrete and technical training and retraining of tax auditors, tax investigators as well as tax officials to boost tax fraud detection strategies. Thirdly, tax authorities in Nigeria should put in place strong tax anti-fraud mechanisms for the prevention of tax frauds and adequate records of tax records must be maintained.