Consequences Of Fail To Pay Taxes In Nigeria

Quick answer: Consequences Of Fail To Pay Taxes In Nigeria is a public legal-education guide. The correct legal step may depend on the facts, documents, location, timing, and current law, so readers should seek tailored legal advice before acting.

This article is provided for general legal education only and is not a substitute for advice on a specific matter.

Introduction

CONSEQUENCES OF FAILURE TO PAY TAXES IN NIGERIA

Tax Avoidance and Tax Evasion are both types of tax noncompliance; the difference between the two phrases is whether one is lawful, and the other is not. Tax avoidance is the use of legal strategies to reduce taxable income or unpaid taxes. The business and financial operations of the taxable person or entity are set up in a way that prevents them from paying the full amount of taxes due. The illegal practice of hiding taxable income from tax authorities in order to avoid paying taxes is known as tax evasion.

The obligation to pay taxes has existed since the beginning of time and is as crucial to any government as air is to people. For this reason, tax is referred to as "a monetary burden imposed onto persons or property to pay government expenditures."

In Matthew v. Chicory Marketing Board , tax was said to be a compulsory extraction of money by a public authority for public purpose; or raising money for the purpose of administering government budget by means of contribution from individual persons i.e. citizens.

The payment of tax in Nigeria is backed up by section 24(f) of the 1999 Constitution. It provides that:

"It shall be the duty of every citizen to- Declare his income honesty to appropriate and lawful agencies and pay his tax promptly."

The Court in the case of Independent Television/Radio v. E.S.B.I.R. also relied on the above Constitutional provisions of the duty of a citizen to pay tax. It added that:

"Failure of the citizen to pay tax shall strip him of the protection afforded by section 44(1) of the Constitution."

INABILITY OF THE GOVERNMENT TO EXECUTE SOCIO-ECONOMIC PROGRAMME.

The following are the effects of tax avoidance and evasion in the economy.

Naturally, a country's lack of resources prohibits the government from fulfilling its duties for the welfare of the populace. Basic necessities like creating public schools, providing water, constructing adequate roads, maintaining facilities, paying civil officials' wages, etc. become increasingly challenging to accomplish.

THE REDUCTION IN REVENUE

Amount of revenue the government would have earned through taxation is drastically reduced as a result of tax avoidance and evasion. As was already mentioned, this makes the nation more vulnerable to borrowing, inhibits it from investing in foreign trade that will strengthen the economy, and makes it unlikely that the nation will ever be able to assist other nations that might be in need.

STAGNANCY IN ECONOMIC GROWTH AND DEVELOPMENT

Taxes are paid with the intention of fostering economic growth and development. This is incredibly difficult to accomplish when people choose not to pay taxes. The government's ability to carry out several projects relating to the welfare of its residents and engage in international trade in order to forge alliances with the nations that matter in the globe is made possible by tax revenue.

NB: This article is not a legal advice, and under no circumstance should you take it as such. All information provided are for general purpose only.

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