Analysis of the Determinants of Tax Policy Compliance in Nigeria

Robert Dibie, Raphael Dibie


This paper examines the factors that determines tax policy compliance and the impediments to effective tax administration in Nigeria. The objectives are to: (a) determine if there is a relationship between knowledge of tax laws and compliance in Nigeria; and (b) if there is a positive relationship between corruption and tax compliance. The paper argues that taxpayers’ knowledge of Nigerian tax laws could positively influence citizens attitude and behavior towards compliance. The primary data were derived from interviews, and questionnaires. The conceptual frameworks are based on strategic and benchmark approaches, and principal agent model. The data analysis shows that there is a strong positive relationship between lack of tax knowledge, low level of education and tax compliance in Nigeria. The findings of this study also reveal that there is a strong positive correlation between corruption and tax evasion. The inadequate use of information technology in tax administration, and lack of government incentives as well as poor working condition have negative correlation with tax collection management. There is however significant relationship between inappropriate assessment system, poor economic situation in the country, and lower tax compliance rate in the country. Some benchmark strategic policy recommendations are provided on how to better implement tax compliance laws in Nigeria in the future.

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