Effects of Tax Audit on Tax Compliance and Remittance of Tax Revenue in Ekiti State

Abstract

Low tax compliance and remittance limit the capacity of government to raise revenue for developmental purposes because the higher the revenue, the more likely government will put in place developmental plans for the enhancement of the living standard of the people. Based on this, the study examined the effects of tax audit on tax compliance and remittance of tax revenue in Ekiti State. It specifically investigated the effect of desk audit, field audit, back duty audit and registration audit on tax compliance and remittance of tax revenue in Ekiti State. A close-ended questionnaire was used to gather the needed data and an analysis was carried out through correlation matrix and multiple regression. It was discovered that desk audit, field audit, back duty audit and registration audit had a positive significant effect on tax compliance and remittance in Ekiti State with the p-value of 0.001, 0.000, 0.000 and 0.000 respectively. Worthy of note was that field audit was the most significant predictor out of all the predictor variables. It was concluded that tax audit could engender tax compliance and remittance in Ekiti State. It was therefore recommended that Ekiti State government should intensify tax audit through the employment of more competent staffs and intermittent training in order to cause increase in tax compliance level in the State. Also, Audited files that reveal criminal act should not be taken slightly. Tax evaders and avoiders should be seriously dealt with so as to deter others from plodding the same criminal path.

Potential Factor that Determines Taxpayer Compliance: The Development of Theory of Reason Action

“…In general, tax audit is an activity carried out by the tax office or experts who have the authority of the tax office, whose task is to examine taxpayers regarding the tax owed. Tax audits can be said to have an influence on taxpayer compliance, the statement is in accordance with other research [4][5][6][7][8] that tax audits affect mandatory compliance tax.…”

Deterrent tax fraud in nigeria: a causal factor and conceptual review

“…Accordingly, tax audit is relevant to tax administration both developing and developing countries of the world so as to avoid tax fraud (evasion and avoidance) by tax payers such as organization and individuals. [66] Define tax [4] audit as a process whereby the tax authority examines certain issues concerning to the profits of a company and its other related returns as it may deem necessary and expedient in accordance with the relevant provisions of the Act. However, the primary purpose of tax audit would be to ascertain the extent to which tax payers may have comply with the relevant statutory provisions of the tax Act in respect of their audited financial statements and other tax related returns.…”

“…The paper reviewed that the tax payers' relationships with tax authority and weak penalties have a significant influence on tax evasion while tax rate shows a positive relationship with tax evasion. Therefore, the higher the tax rate, the higher the tendency of tax evasion [66] in Nigeria.Did a study that examines the effects of tax audit on tax compliance in Ekiti State, Nigeria. The study uses primary data and employed multinomial Logistic Regression Analysis to determine its findings.…”

Bearing of Tax Audit on Tax Compliance and Revenue Generation in Ekiti State

“…Tax Compliance Tax Audit Back Duty Audit Field Audit Desk Audit levied based on the criterion and without reference to specific benefits received to execute the nation's economic and social objectives (Dada et al, 2017;Olaoye & Ekundayo, 2019). Taxation primarily aimed at generating revenue for the government to cater to national or state expenditure as the case may be (Mu'azual 2012).…”

“…Every individual or organization liable under the relevant tax law of the country is required to file the returns of their income(s) and other relevant information/matters to the relevant tax authority having the power to assess him or her to tax for the relevant year of assessment, and this is subject to the satisfaction of the returns by the Tax Authority (Olaoye & Ekundayo, 2019;Oyebanji, 2006). However, it is expedient for the relevant tax authority to review and verify self-assessed tax filed by individual taxpayers by way of an audit and, or investigation (KPNG, 2017), this exercise was put in place like control to reduced non-compliance (Ojo, 2016;Olaoye & Ekundayo, 2019). Thus, if this professional examination was not in place as control over the taxpayer; it will be difficult for the government to actualize its aims and objectives.…”