CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
It is not an overstatement that taxation plays a prominent role in the economy of any nation as one of the major means of generating revenue. In the past government derived more revenue from Company Income tax compared to any other sources of revenue but now reverse is the case and this is due to the ineffectiveness of the administrative machinery of Company Income Tax .i.e., Federal Inland Revenue Service (FIRS), the government policy and the conduct of the tax payers. It was also observed by the Federal Inland Revenue Services (FIRS) that many Companies are in the habit of evading company income tax payment and this attitude has slowed down the growth of economy of the nation. However, the various taxes collected by the government particularly the company income tax are used to provide social amenities like water, electricity, good road network, education, health care services and many more which in tum promote the standard of living of the citizens and residents of a nation. Without prompt payment of tax by the companies and other tax payers, the government may not be to fully play its expected roles to the citizens.In many of the developed and underdeveloped countries taxation has been the major source of revenue to the government unlike Nigeria where all attention is being concentrated on crude oil as the major source of income to the government.
Furthermore, taxation is a yardstick by which government regulates production and consumption of goods and this role attests to how taxation contributes to the growth of a national economy but the reverse is the case in Nigeria system. The partial neglect of this source has turned the economy of the country into mono-economy and the revenue from this source can also be regarded to as mono-revenue. In a tax system, the company income tax is a form of direct tax which the taxpayer themselves bear the burden. This is the reason why some companies try to evade the payment of such taxes compare to the indirect form of taxes in which the burden is transferable. This means that the final users of such goods bear the burden of such taxes indirectly. Hence, many companies avoid tax or completely evade tax thereby reducing the total revenue of the government.