Challenges in the Era of Globalization - iaabd

Proceedings of the 12th Annual Conference © 2011 IAABD
company accruing in, derived from, brought into or received in Nigeria in respect of all kinds of income;
that is income derived from a trade, business or investments. The Act places obligations on corporate
taxpayers based on the arrangements of their formation, their type of business activity and their location.
Four broad categories of obligations however exist for almost all corporate taxpayers namely: registration
in the system; timely filing or lodgement of requisite taxation information; reporting of complete and
accurate information (incorporating good record keeping); and timely payment of tax obligations
(Baiyewu, 2000). For their part, taxpayers have an important role to play in meeting these obligations, as
in many situations, it is only they who are in a position to know that they may have an obligation under
the law (OECD, 2004).
Many studies noting a substantial tax gap between what is collectable and what is actually collected in
taxes have suggested lack of voluntary compliance by current and potential taxpayers as one of the main
reasons for the tax gap (Oberholzer, 2008, Richardson & Sawyer, 2000; Long & Swingen, 1988; OECD,
2004). Such studies have attempted to explain the noncompliance attitude of tax payers to their
obligations from different perspectives. From the economic rationality perspectives, such factors as the
tax complexity, cost of compliance (amount of tax owed) were identified as factors which shape the
behaviour of taxpayers (Etzioni 1986 Richardson & Sawyer, 2000; Long & Swingen, 1988; OECD,
2004).
From the behavioural perspective, factors that have been used to explain tax payers’ attitude include
perception of fairness in collection procedures and perception of fairness in the way tax revenue is
utilized. Ritsema et al. (2003), found taxpayers’ perceptions of the fairness of the tax system as likely
influence on willingness to evade payment. Thurman et al. (1984) and Richardson and Sawyer (2000)
also explored justice concerns on whether or not citizens receive the goods and services they believe they
deserve given the taxes that they pay. Wenzel (2002) and Coleman et al. (2001) noted that perceptions of
unfair treatment were reputed to be rife among the small business community in Australia who the
Australian Taxation Office (1996) noted to express strong resentment against the tax system. Noble
(2000) and Tan and Veal (2003) also raised fairness issues in relation to administration and tax levels in
New Zealand. Etzioni (1986) concluded that tax evasion is linked to the feeling of tax unfairness in public
opinion (1960-1980), even when tax rates remain unchanged for the United States of America.
Apart from the perception of fairness, taxpayers’ attitudes are also argued to be learned and in some way
affected by experience and knowledge (Lewis, 1982). Butressing this argument, Peters (cited in
Oberholzer, 2008, p.65) noted that citizens do on the whole like the benefits they receive from
government and tend to be much more willing to pay taxes when reminded of the benefits received as a
consequence of doing so, thus providing support for the suggestion that tax knowledge will affect the
attitude of tax payers. Eriksen and Falian (1996) reported significant changes in attitudes towards taxation
from tax course exposure. Increasing tax knowledge of taxpayers is an important function of tax
administration (OECD, 2004; Tanzi & Pellechio, 1995). Tax administration’s effectiveness is therefore
expected to result in high level of knowledge among tax payers which should in turn result in a higher
level of compliance.
Model of the Study
It is from the behavioural perspective that this study examines impacts on taxpayers’ attitude to
compliance with tax laws. The study proposes relationships among four groups of variables namely;
Perception of Tax Administration structures and procedures; Perception of governance; and Tax payers’
knowledge as the independent variables and the Compliance Attitude of taxpayers as the dependent
variable. The study argues that poor compliance attitude by the Company income taxpayers in Nigeria is
influenced to a higher extent by the high perception of tax payers about the lack of accountability and
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