Taxpayers Knowledge and Compliance: Evidence from Direct Assessment Tax in Lagos State
Keywords:Tax, Tax Knowledge, Tax Compliance, Tax Payment, Direct Assessment Tax
The research work examines the nexus between Tax Knowledge and Tax Compliance among Taxpayers: Evidence from Direct Assessment in Lagos State. This study adopts the survey research design to elicit responses from selected taxpayers in the Ikeja Lagos State of Nigeria to explore what they perceived as the relationship between tax knowledge and tax compliance regarding tax payment and tax filing of returns. Primary data was collected through a designed questionnaire and was administered using the Kaiser-Meyer-Olkin test. Cronbach Alpha was also used in establishing the sampling adequacy and reliability of the research instrument. The survey results were collected from 200 respondents in three categories in Lagos State with 190 valid responses, including self-employed, taxpayers in public and private establishments in Ikeja from October to November 2020. The study adopted a judgmental sampling technique. The data extracted from the questionnaires were analyzed using a simple table as descriptive and Pearson Correlation at 1% Level of Significance as inferential statistics. The findings revealed that the general tax knowledge was significantly related to tax compliance in payment terms (r = .993, p =0.000) and tax compliance in terms of filing of returns (r = .986, p =0.000). thus, the study concluded that there is a positive relationship between tax knowledge and tax compliance.
Adedeji, T. O., & Oboh, C. S. (2012). An empirical analysis of tax leakages and economic growth in Nigeria. European Journal of Economics, Finance and Administrative Sciences, 48.
Adediran, S. A., Alade, S. O., & Oshode, A. A. (2013). The impact of tax audit and investigation on revenue generation in Nigeria. European Journals of Business Management, 5(26).
Alm, J., Jackson, B. & McKee, M. (1992). institutional uncertainty and taxpayer compliance. American Economic Review, 82, 18-26.
Andreoni, J., Erard, B. & Feinstein, J. (1998). Tax compliance. Journal of Economic Literature, 36, 818-860.
Akintoye, I. R., & Tashie, G. A. (2013). The effect of tax compliance on economic growth and development in Nigeria. West-Africa. British Journal of Arts and Social Sciences, 2(2), 222-232.
Allingham, M.G. & Sandmo, A. (1972). Income tax evasion: A theoretical analysis. Journal of Public Economics, 1, 323-338. http://dx.doi.org/10.1016/0047-2727(72)90010-2
Badara, M. S. (2012). The effect of tax audit on tax compliance in Nigeria (A study of Bauchi State Board of Internal Revenue). Research Journal of Finance and Accounting, 3(4), 74-80.
Bahl, R. & Bird, R. (2008). Tax policy in developing countries: Looking back and forward. National Tax Journal, 297-301. https://doi.org/10.17310/ntj.2008.2.06
Cechovsky, N. (2018). The importance of tax knowledge for tax compliance: A study on the tax literacy of vocational business students. In C. Nägele & B. E. Stalder (Eds.), Trends in Vocational Education and Training Research. Proceedings of the European Conference on Educational Research (ECER), 113– 121). https://doi.org/10.5281/zenodo.1319646
Chattopadhyay, S. & Das-Gupta, A. (2002). The compliance cost of the personal income tax and its determinants. Report to the National Institute of Public Finance and Policy, New Delhi.
Csontos, L., Kornai, J. & Tóth, I.G. (1998). Tax awareness and reform of the welfare state: Results of a Hungarian survey. Economics of Transition, 6, 287-312. https://doi.org/10.1111/j.1468-0351.1998.tb00050.x
Djawadi, B., & Fahr, R. (2013). The impact of tax knowledge and budget spending influence on tax compliance. IZA Discussion Paper Series. 7255. Bonn: Institute for the Study of Labor.
Doran, M. (2009). Tax Penalties and Tax Compliance: A Personal Income Tax Non-Compliance in Malaysia. PhD Thesis, Victoria University, Melbourne.
Fakile, A.S. (2011). Analysis of Tax Morale and Tax Compliance in Nigeria. PhD Thesis, Covenant University, Otta.
Fauziati, P., Minovia, A.F., Muslim R.Y. & Nasrah, R. (2016). The impact of tax knowledge on tax compliance case study in Kota Padang, Indonesia. Journal of Advanced Research in Business and Management Studies. 2(1), 22-30
Feld, L.P. & Frey, B.S. (2007) Tax compliance as the result of a psychological tax contract: The role of incentives and responsive regulation. Law and Policy. 29, 102-120. https://doi.org/10.1111/j.1467-9930.2007.00248.x
Gberegbe, F. B., & Umoren, A. O. (2017). The perception of tax fairness and personal income tax compliance of SMEs in rivers state. Journal of Research in Business and Management. 5(2), 40-51.
Gordon, J. (1990). Evading taxes by selling for cash. Oxford Economic Papers. 42, 244-255.
Hasseldine, J., Holland, K. & Rijt, P.V. (2009). The Management of Tax Knowledge. The Association of Chartered Certified Accountants, ACCA, London.
James, S. & Alley, C. (2004). Tax compliance, self assessment, and tax administration. Journal of Financial and Management in Public Services. 2, 27-42.
Jemaiyo, B. & Mutai, G. C. (2016). Determinants of tax compliance and their influence on the level of tax compliance in the real estate sector, Eldoret town-Kenya. African peer-reviewed journal. 12(1), 555-584.
Kirchler, E. (2007). The Economic Psychology of Tax Behavior. Cambridge University Press, Cambridge. https://doi.org/10.1017/CBO9780511628238
Lai, M.L, Zalilawati, Y., Amran, M.M. & Choong, K.F. (2013) Quest for tax education in non-accounting curriculum: A Malaysia study. Asian Social Science. 9, 154-162. http://dx.doi.org/10.5539/ass.v9n2p154
Loo, E.C. & Ho, J.K. (2005). Competency of Malaysian salaried individuals in relation to tax compliance under self assessment. Journal of Tax Research, 3, 45-62.
Lumumba, O.M., Migwi, S.W. & Magutu, O. (2010). Taxpayers' attitudes and tax compliance behavior in kenya: how the taxpayers' attitudes influence compliance behavior among SMEs business income earners. African Journal of Business & Management, 1, 112-122.
Marrelli, M. & Martina, R. (1998). Tax evasion and strategic behavior of the firm. Journal of Public Economics, 37, 55-69. https://doi.org/10.1016/0047-2727(88)90004-7
Masud, A., Aliyu, A. A. & Gambo, J. E (2014). Tax rate and tax compliance in Africa. European Journal of Accounting, Auditing, and Finance Research, 2(3), 22 – 30.
Modugu, K. P., and Anuaduba, J. O. (2014). Impact of tax audit on tax compliance in Nigeria. International Journal of Business and Social Science, 5(9), 207-215.
Mohani, A. (2001). Personal Income Tax Noncompliance in Malaysia. PhD Thesis, Victoria University, Melbourne.
Mukasa, J. (2011). Tax Knowledge, Perceived Tax Fairness, and Tax Compliance in Uganda. Master of Science, Makerere University, Kampala.
Namusonge, G.S., Biraori, O.E. & Kipicoech, E.C. (2014). Factors affecting tax compliance among small and medium enterprises in Kitale, Kenyan. International Journal of Recent Research in Commerce Economics & Management, 1, 60-75.
Niemirowski, P. Wearing, A. J. Baldwin, S. Leonard, B. & Mobbs, C. (2002). The influence of tax-related behaviours, beliefs, attitudes, and values on Australian taxpayer compliance.
Ojo, A., & Sunmola, O. (2017). Tax Audit and Investigation: Trigger Points and Mitigative Measures. KPMG Advisory Services, Nigeria.
Ojonta, B. A. (2013). Tax Audit and Investigation in Enugu State. Nigeria: University of Nigeria Nsukka.
Okonkwo, A. I. (2014). Critical evaluation of tax audit and investigation processes in enhancing tax compliance: being a paper presented at the CITN MPTP in Uyo on October 8-9.
Oladipupo, A. O., & Obazee, U. (2016). Tax knowledge, penalties, and tax compliance in small and medium scale enterprises in Nigeria. iBusiness, 8, 1-9. https://doi.org/10.4236/ib.2016.81001
Oloyede F. L., Kupoluyi A. K., Oyedokun, G. E. & Benjamin, R. D. (2017), Informal sector tax administration and monitoring in Nigeria. Journal of Taxation and Economic Development, 16(2), 16-35.
Onuoha, L. N., & Dada, S. O. (2016). Tax audit and investigation as imperatives for efficient tax administration in Nigeria. Journal of Business Administration and Management Sciences Research, 5(5), 066-076
Palil, M.R. (2010) Tax Knowledge and Tax Compliance Determinants in Self Assessment System in Malaysia. PhD Thesis, University of Birmingham, Birmingham.
Palil, M. R., & Mustapha, A. F. (2011) Tax audit and tax compliance in Asia: A case study of Malaysia. European Journal of Social Sciences, 24(1), 7-32.
Richardson, G. (2006). Determinants of tax evasion: A cross country investigation. Journal of International Accounting, Auditing, and Taxation, 15, 150-169. https://doi.org/10.1016/j.intaccaudtax.2006.08.005
Saad, N. (2012). Perception of tax fairness and tax compliance behavior: A Comparative Study. Jurnal Pengurusan, 36, 89-100.
Saad N. (2014). Tax knowledge, tax complexity and tax compliance: Taxpayers' view. Procedia - Social and Behavioral Sciences 109, 1069 – 1075. https://doi.org/10.1016/j.sbspro.2013.12.590
Saira, K., Zariyawati, M.A. & Yoke-May, L. (2010) An exploratory study of goods and services tax awareness in Malaysia. Seminar on National Resilience (SNAR), Political Management and Policies in Malaysia. 13-15
Singh, V. & Bhupalan, R. (2001). The Malaysian self assessment system of taxation: Issues and challenges. Tax National, 12-17.
Slemrod, J. (2000). Why People Pay. Taxes: Tax Compliance and Enforcement, Ann Arbor, University of Michigan Press. 1-8.
Soyemi, K. A. (2014). Auditing and Assurance Services. Abeokuta: Lek Silicon Publishing Company Ltd
Soyinka, K. A., Jinadu, O., & Sunday, O. M. (2016). Tax audit determinants and corporate tax compliance in Nigeria. The International Journal of Business & Management, 4(5), 95-99.
Virmani, A. (1989). Indirect tax evasion and production efficiency. Journal of Public Economics, 39, 223-237. https://doi.org/10.1016/0047-2727(89)90041-8
Wadesango Newman (2018). Evaluating the impact of tax knowledge on tax compliance among small medium enterprises in a developing country. Academy of Accounting and Financial Studies Journal, 22,(6), 1528-2635-22-6-302,
Wang, L. & Conant, J. (1988). Corporate tax evasion and output decision of the uncertain monopolist. National Tax Journal, 41, 579-581.
Yan, M. C. K., Arokiasamy, L., & Suat, C. L. A. (2010). Indirect taxation: Awareness and impact on undergraduates. International Research Journal of Finance and Economics, 41, 43-50.
How to Cite
Copyright (c) 2020 Indian-Pacific Journal of Accounting and Finance
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright of all articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) belongs to their respective authors. Site users are permitted to download and print the articles for personal use. Further reproduction and/or distribution is not permitted, except for brief excerpts or quotations intended for inclusion in some other original works. In this case, proper attribution must be made to the author/copyright holder, and the place of publication must be acknowledged. Altering, editing or otherwise modifying the content of information obtained from the Indian Pacific Journal of Accounting and Finance (IPJAF) is a breach of copyright.
While you retain the copyright of your original material, by publishing in the Indian Pacific Journal of Accounting and Finance (IPJAF) , you will have agreed to the following contractual terms:
- The article is the original work of the stated author(s).
- The work has not been published previously.
- If the Article contains copyright material owned by others, written permission has been obtained from the copyright owner(s) to republish such material in any print or electronic medium and that you have included appropriate acknowledgement of such rights in the Article.
- The author agrees to grant a non-exclusive license to the Indian Pacific Journal of Accounting and Finance (IPJAF) to communicate the work to the public.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may use the article for publicity purposes.
- The Indian Pacific Journal of Accounting and Finance (IPJAF) may publish the article on third-party sites.
- Any subsequent publication of the article by the authors will carry the acknowledgement: First published in the Indian Pacific Journal of Accounting and Finance (IPJAF) [http://ipjaf.omjpalpha.com]
The Indian Pacific Journal of Accounting and Finance (IPJAF) has taken all reasonable measures to ensure that material contained in this website is the original work of the author(s). However, the Journal gives no warranty and accepts no responsibility for the accuracy or the completeness of the material; no reliance should be made by any user on the material. The user should check with the authors for confirmation.
Articles published in the Indian Pacific Journal of Accounting and Finance (IPJAF) do not represent the views held by the editors and members of the editorial board. Authors are responsible for all aspects of their articles except the editorial screen design.