Abstract
This research work examines the strategies and practice of accounting firms in tax avoidance (the Nigerian experience) and also why businessmen avoid tax payments, to what use is taxation to investors and business and how taxation weaken companies financially. The sample size for the study to select the respondents, (120) questionnaires were designed and administered while (100) were returned. The researcher used simple percentage (%) and chi-square (X2) analyze the data and test of hypothesis.
From the analysis of data, it was discovered that tax avoidance has significant impact on corporate profit, also corporate tax affect revenue generation of any government. In the light of these findings, it was concluded that tax with significant impact on revenue generation and avoidance have resulted to poor infrastructural development of many nations. Finally, the following recommendations were made amongst others; government should tighten the various possible loopholes that are capable to create avenues for tax avoidance, government should make it a point of duty to check the activities of the accounting firms in connection with tax avoidance.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Taxation is the aspect of fiscal policy of government that deals with the raising of revenue. Christonson & Murphy (2004, pp.37-38) assert that in economic terms, taxation transfers wealth from corporate organizations and business to the government of the nation. A fund generated from taxation has been used by states and their functional equivalent throughout history to carry out many functions. In buttressing the above opinion US General Accounting office (2003), notes that most modern government also use corporate taxes to fund welfare and public service, and these services can include education system, pensions for the aged, to fund foreign and military aid, public transportation and to influence macro-economic performance of economy.In societies with interests in business, the role of accounting firms in tax avoidance cannot be ruled out.
Though in the past, accounting and auditing services formed the core business for accounting firms, but today, it is a complete different issue. Sikka & Hampton (2006), opine that the state guaranteed monopoly of external auditing has been the making of accounting firms unlike other consultancy business, it gives them comparatively easy access to company executives and provides an opening to impress potential clients with zeal about meeting deadlines, attention to details to the value of surveillance, judgement, control and related implications of cutting across costs and inefficiencies. In the real sense, accounting firms have applied their strategies and practices in taxation in different ways.
They have used their expertise skills in ensuring that their clients costs or expenses are reduced to the lowest minimum.In the course of carrying out their roles for their clients, or corporate organizations they are being accused of growing profit and reducing taxes to the detriment of the state to provide social infrastructure for the populace.Commenting on the above view Sikka & Wilmot (1995, p.184) contend that accounting firms have long been identified as key players in the “rules avoidance” and have further enhanced their credentials by developing and marketing a variety of tax avoidance schemes to enable their audit clients and others report higher profits.In contemporary entrepreneur culture, tax avoidance is promoted as a natural inevitable and a desirable pursuit. Ernest & Young Partner (n.d) claimed that “tax is a cost of doing business.