Published August 25, 2025 | Version v2
Journal article Open

AN EXAMINATION OF THE EFFECTIVENESS OF TAX PENALTIES IN COMBATING TAX OFFENCES IN NIGERIA

  • 1. LLB (Hons) BL, LLM, PhD, Department of private and property law Faculty of law, University of Abuja.
  • 2. Faculty of Law, University of Abuja.

Description

Taxation is a critical engine for socio-economic growth and development, serving as a primary revenue source for governments worldwide. However, tax offences, including evasion, avoidance, and non-compliance, significantly frustrate revenue generation efforts. This article examines the effectiveness of tax penalties as a mechanism for combating tax offences and improving tax compliance within the Nigerian tax system. It provides a detailed analysis of the legal framework, outlining both criminal sanctions (fines and imprisonment) and civil sanctions (distraint of goods, sealing of premises, and imposed interests) as provided for in key statutes like the Personal Income Tax Act (PITA), Companies Income Tax Act (CITA), and the Federal Inland Revenue Service (Establishment) Act (FIRSEA). The study argues that while a structured penalty regime exists, its deterrent effect is undermined by significant challenges. These include the technical nature of tax laws leading to procedural failures in court, difficulties in tracking a highly mobile populace and informal sector, inadequate prosecution of defaulters, low levels of tax awareness, and the pervasive issue of multiple taxation. The article concludes that the current penalties are underutilized and, in some cases, archaic. To enhance effectiveness, a multiple approach combination is recommended, encompassing stricter enforcement and prosecution, increased taxpayer education, harmonization of taxes to eliminate duplication, and a revision of penalty structures to reflect modern economic realities, thereby fostering voluntary compliance and boosting national revenue.

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Dates

Accepted
2025-08-25