FRAUD IDENTIFICATION IN FORENSIC TAX INVESTIGATION AND RULE OF EVIDENCE

The unceasing and interminable tax related fraud resulting to corporate collapse and the
failure of the statutory audit to detect and prevent fraudulent activities which had led to the
impoverishment of investors had given rise to the need for forensic audit and
investigations.
In Nigeria, the recent worldwide economy downturn through COVID-19 pandemic and
decrease in price of crude oil and sales quantity in the global market has contributed to
difficulties in the implementation of annual budget. This resulted to a shift to tax revenues
but the major challenge is the high rate of tax fraud and tax evasion.
Fraud is the deliberate action, false depiction or suppression of material facts for the
purpose of deceiving another to act upon it in order to be cheated. Tax fraud on the other
hand, is the deliberate deception and tricks to minimize tax payment or refusal in tax
payment through falsification of tax returns or evasion. Tax fraud is an intentional
deception by taxpayer that results in an injury (tax loss) to the government. It involves both
underpayment of tax and fraudulent intent. This can be committed against the government
and tax authorities that collect taxes in the federal, state and local government. Tax fraud
have both domestic and international dimension. The domestic dimension is in the form of
tax evasion, especially as a result of high number of informal sector or shadow economy.

Tax fraud is not only associated with reputational damages of corporations and negative
values for investors, it also implies negative consequences for public budgets and economic
growth. Therefore, numerous governments have declared the fight against (offshore) tax evasion. Tax authorities as well as accounting research, however, face a huge challenge in
identifying tax fraud.