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1.1 Background to the Study

Government all over the world undertakes huge public expenditures on behalf of their citizens such as the provision of infrastructure in form of reads, bridges, and social services. To meet up with these numerous wants and obligations, government requires substantial (huge) amount of funds. Such funds are usually generated from various sources, which include the imposition of government compulsory levies. Thus, the versatility and imposition of government compulsory levies. Thus, the versatility and importance of taxation cannot be over emphasized.   In fact, taxation serves as one of government’s fiscal policy measure used in stabilizing the economy. For instance, it can be used to curtail the velocity of money when inflation arises. Taxation does not only serve as an effective way of income re-distribution among the citizen of a nation, but also as a toll for reprising to discourage the use of certain harmful products. Furthermore, taxation plays a crucial role in promoting and enhancing economic activity and sustainable growth and development. Through taxation, government ensures that resources the channeled properly towards important projects in the society (Emeni 2000).

The tax system thus features a wide and mixed range or statutes by which the various governments in the country seek to charge and collect revenue for public expenditure. Of these, the most widely based are on income taxation. Once a company is incorporate, it becomes legal entity and is treated under Nigerian law as an artificial person, separate and distinct from its shareholders. Corporate bodies are charged to tax under the Companies Income Tax Act (CITA) 1990, as amended to data. However, while Nigerian Companies are taxed on their worldwide income, foreign companies are liable only as regards the portion of their profits which is attributable to business operations carried on in Nigeria. In addition to the Companies Income Tax, all incorporated companies are required to pay 2% of their assessable profit into an Education Tax Fund. This is changed by virtue of the Education Tax Act.At this juncture, it is worthy to mention that during the pre-colonial era, taxation functioned more or less on ethnic basis. The Nigerian tax system, suffice to say, took after the British tax system both in administration and governing enactments/laws. It is therefore not surprising that income tax as it is know today was first introduced into Nigeria by the then High Commissioner, Lord Lugard in 1904 in the Northern part of the Country (Anyaduba 1999). The administration of the taxation of profits of incorporated companies in Nigeria is vested in the Federal Board of Inland Revenue (FBIR). The Board was established under CITA, section 3 of the Income Tax Administration ordinance of 1958 and has since been subjected to series of amendment in order to yield maximum returns (Federal Board of Inland Revenue Bulletin 2006). The study therefore is warranted since the researcher intends to examine the problems and procedures in the administration of Companies Income Tax in Nigeria.

Statement Of The Problem In the absence of a well – structured policy, the collection of tax levies is problematic and often produces inefficient result, which eventually truncates the process of taxation. With regard to the above, the statements of the research problems for this study therefore arise from the question as follows: Is there any significant effect or non-compliance of tax laws on the administration of Companies Income Tax? How do Companies respond to the payment of Companies Income Tax in Nigeria? Does trained and qualified tax personnel/expect affect the administration of Company income tax? How has government’s revenue from Companies Income Tax been depleted as a result of ineffective administration of Companies Income Tax?

1.3 Objectives of the Study The main objective of this study is to evaluate the effect of company income tax administration on government revenue generation in Nigeria. Specific objectives include the following: i. To determine the proportion of companies income tax contribution in relation to total government revenue. ii. To suggest measures on how to improve the contribution of companies income tax to government revenue base. iii. To review the administration of the companies income tax and recommend improvement in its structure.

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