The final part of a tax system is the tax administration. Creating policy and making tax laws are important. However, without an administration or a tax authority, then such laws are mere laws without execution. This article will explain in the details what tax administration entails in Nigeria.
Definition of tax administration
A tax administration is a body responsible for the management and execution of tax laws of a country.
It can as well be defined as the assessment, collection, enforcement, litigation, formulator of policies, and statistical gathering of data involving tax laws, statutes and conventions.
It is a body. A tax administration is a body established by the government of a country. It is formed based on the established tax acts and laws of the country.
Responsible for management and execution of tax laws. The responsibility of tax administrators to manage and execute tax laws. They ensure that tax liabilities are collected and failure by a taxable person to remit his or her tax returns are penalized.
Assessment of tax. The law allows for personal tax assessment. But in certain events, the tax administrators may carry out an assessment of tax returns of a taxable person.
Collection of taxes. If taxpayers fail to pay taxes, it is the responsibility of the body to ensure that taxes are collected. In ensuring this, tax offices are built in various regions of the country.
Enforcement of tax laws. Although the tax is compulsory, taxpayers may refuse to pay tax either knowingly or not. Also, many taxpayers seek ways to evade taxes. Therefore, tax authorities ensure the enforcement of taxes on citizens. This can be done by announcing through various media the taxes that must be paid by taxable persons.
Litigation against the taxpayer. The body is also responsible for taking tax defaulters to court. Taxpayers whether individual or corporate that fails to pay tax or underpays it may be sued to court for such default by the tax administration established by the government.
Formulate policies. The tax administrators also partake in the formulation of tax policy. The recent tax policy in Nigeria, the Finance Act of 2019 was a joint effort by both the tax administration and other stakeholders.
Gathering of statistics. The tax authorities engage in gathering statistics. From time to time, they inform the public about the amount of revenue generated from taxes to the government.
Tax administration in Nigeria
There are three tax administrators in Nigeria. Each representing the Federal, States and Local governments.
The Federal Inland Revenue Service (FIRS)
The State Internal Revenue Service (SIRS)
The Local Government Revenue Committee
Each state has a tax administration. For Lagos state, it is called Lagos State Internal Revenue Service (LIRS).
Tax administration is run by tax administrators or simply tax authorities. They are saddled with the responsibilities explained above. Generating revenue for the government is its core mandate.