Design And Implementation Of An E-Taxation System

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Design And Implementation Of An E-Taxation System


Abstract


This research study examined the design and implementation of an e-taxation system, using Federal Inland Revenue Services, Uyo as a case study. An E-taxation (electronic taxation) system is an information technology system that enables tax authorities to easily manage tax payments that is made by tax payers. The system also enables tax payers to pay their tax easily without stress. Findings reveal that the Federal Inland Revenue service has already implemented e-taxation system, and taxpayers are identified with a unique number called Tax Identification Number. The software development methodology adopted is the spiral development methodology and the programming language used is visual basic 6.0. In conclusion E-taxation system is very useful for managing tax payments. It eliminates the need to work with traditional flat files and enabling the updating of tax payment easily. Useful recommendations are also offered such as encouragement of research in the area of E-taxation.


Chapter One


1.0 Introduction

1.1 Preliminaries

According to Jugu etal (2012), most economies of the world are based on one form of taxation or the other. Taxation has always been with man and it will continue to be with him. Countries of the world have different fiscal policies that enable them to explore various types of taxation and impose them on their citizens for the purpose of enhancing revenue and for regulation and governance of the economy. The government of Nigeria, as one of these countries, has legislative powers to impose on its citizens, any form of tax and at whatever rate it deems appropriate. Tax is a compulsory extraction of money by a public authority for public purposes and taxation is a system of raising money for the purpose of governance by means of contributions from individuals or corporate bodies (Sayode & Kajola, 2006).

With the increase in the adoption of information and communication technology to facilitate organizational operations, the federal inland revenue service has adopted the concept of E-taxation (Electronic Taxation) to enable tax payers pay their tax irrespective of their location online. Prior before the use of electronic taxation, tax payments were manually done and this was not effective as many taxes could not be collected because of the inability to uniquely identify each tax payer. Electronic payments of tax shall refer to ability to collect taxes, levies, duties, fees by Government agencies or its authorized agencies electronically and also the Ability of Government to refund excess tax payments to organizations/businesses or Individuals electronically.

Manual filing remains the traditional and most widespread method of submitting individual income tax returns for government revenue services, be it in Taiwan or any other country. For several years, both the United States and Canada have tried to introduce electronic filing systems to improve government operations and reduce costs. Tax authorities began applying the technology of two-dimensional (2D) bar code to income tax returns because it allows them to scan tax-filing data automatically into the computer without manual data entry (Hwang, 2000).

According to Ayodele (2013), technology is influencing our lives and continues to change the way we do things from the simple day to day activities to the complex and less routine tasks. The impact of technology can be seen and felt in every area of our lives from commerce to entertainment, education, communications, healthcare, defense and taxation. According to the World Bank and PwC Paying Taxes Report 2013, sixty six economies had fully implemented electronic filing and payment of taxes as at 2010. Twenty of them adopted the system in the past 7 years. An electronic system for filing and paying taxes, if implemented well and used by most taxpayers, benefits both tax authorities and taxpayers. For tax authorities, electronic filing lightens the workload and reduces operational costs – such as the costs of processing, storing and handling tax returns.


1.1 Theoretical Background

With the rising adoption of ICT and the numerous benefits it offers, virtually every sector of endeavor is taking advantage of it to improve their daily operations. Tax payment is very important as it provides revenue for the government to develop the society, however, without the use of computer technologies to aid tax payment, it will be difficult to manage payments. Since it is obvious that this challenge can be overcome using the right ICT technology, revenue management services such as the Federal Inland Revenue Service of Nigeria has adopted the idea of utilizing ICT to better manage tax payment operations. For effective implementation, it is important that the features and operations of an electronic taxation system be well understood and this forms the background of the study.


1.2 Statement of Problem

For many countries all over the world including Nigeria, it is difficult to manage tax payments as there had been no system to effectively monitor the payments of taxes so as to determine who is defaulting tax payments and who is not. Also, tax payers find it difficult to pay taxes due to administrative bottlenecks and long queues. Consequently, due to the problems the total revenue gotten from tax payments is below expectation because of the lack of an operational and well interconnected electronic tax payment system. It is in view of this situation that this research work is carried out as an attempt to implement an e-taxation system.


1.3 Aim and Objectives of the Study

The aim of the study is to design and implement an e-taxation system. The following are the objectives of the study;

  1. To develop a workable e-taxation system
  2. To showcase the concept of e-taxation
  3. To present the need for an e-taxation system
  4. To showcase the features of an e-taxation system
  5. To present the benefits of an e-taxation system
  6. To present the limitations of an e-taxation system

1.4 Significance of the Study

The significance of the study is that it will bring to light the relevance of an e-taxation system that will facilitate the operations of Federal Inland Revenue Services, Uyo in the collection and updating of tax records. The research study will also serve as a useful reference material to other scholars and researchers seeking for related information on the subject of e-taxation.


1.4 Scope of the Study

This study covers the design and implementation of an E-Taxation system using Federal Inland Revenue service, Uyo, Akwa Ibom state as a case study.


1.6 Organization of Research

This research work is organized into five chapters.

  1. Chapter one is concerned with the introduction of the research study and it presents the preliminaries, theoretical background, statement of the problem, aim and objectives of the study, significance of the study, scope of the study, organization of the research and definition of terms.
  2. Chapter two focuses on the literature review, the contributions of other scholars on the subject matter is discussed.
  3. Chapter three is concerned with the system analysis and design. It presents the research methodology used in the development of the system, it analyzes the present system to identify the problems and provides information on the advantages and disadvantages of the proposed system. The system design is also presented in this chapter.
  4. Chapter four presents the system implementation and documentation, the choice of programming language, analysis of modules, choice of programming language and system requirements for implementation.
  5. Chapter five focuses on the summary, constraints of the study, conclusion and recommendations are provided in this chapter based on the study carried out.

1.7 Definition of Terms

Tax:

It is a compulsory levy imposed by a government on its citizens and used to run the government and finance projects.

Levies:

Money raised under government authority.

Duties:

These are taxes levied on imported or exported goods

Fees:

These are charges made by government institutions and sometimes for services rendered.

Tax authority:

Refers to the relevant agency with authority to collect tax on behalf of the federal government

Tax payer:

Refers to the individual or organization paying tax on behalf of its employees

Service providers:

Refer to system providers who own the technical infrastructure

CIFTS:

Central Bank Inter-bank Funds transfer

RTGS:

Real Time Gross Settlement System

NEFT:

National Electronic Funds Transfer

NIBSS:

Nigeria Interbank Settlement System

Tax amount:

The amount of tax due to be paid by the tax payer

Due Date:

The date the tax is due for payment

TRC:

Tax reference code refers to the code used by your employer to calculate the amount of tax to deduct from your pay.

TIN:

Tax identification number is a unique 14 digit (or any specified digit) sequential number generated electronically as part of the registration process and assigned to a tax payer, company, enterprise or individual for identification.


Chapter Five


Summary, Conclusion and Recommendations

5.0 Introduction

This chapter presents the summary, conclusion, constraints of the study and offers useful recommendations.


5.1 Constraints of the Study

In carrying out the research work, some challenges were faced that limited the study such as:

Time:

The time given for the completion of the research work was too short hence the researcher had speed up the research work to meet up and this has an impact on the study.

Limited Materials:

Few materials were found pertaining to the research area and this limited the bulk of the literature review.

Finance:

The high cost of textbooks, internet browsing and transportation to different libraries to gather materials stood as a constraint to the research work.


5.2 Summary

E-Taxation means trans-organizational processes with data transfer (upload and download) between the IT systems of the professionals and those of the tax authoritiesThe overall aim of e-taxation is to replacecumbersome manual, bureaucratic service systems withcollaborative, efficient, process-driven and secure onlinedelivery. It is a type of e-filing/e-payment system. All the files of tax payers are in electronic format and payments can be done electronically. The increased focus on the provision of electronic services reflects a growing view that tax administrations must create an enabling environment to encourage voluntary compliance and enforce the law effectively.


5.3 Conclusion

E-taxation system is very useful for managing tax payments. It eliminates the need to work with traditional flat files and enabling the updating of tax payment easily. The adoption of e-taxation is a step in the right direction to improve tax services.


5.4 Recommendation

The following recommendations are made based on the findings of the study:

  1. Continuous development in E-tax should be encouraged
  2. Research in the area of E-taxation should be encouraged
  3. Experts in the area of E-tax should be contracted to make improvements in the E-taxation system.
  4. Government should put in more effort to develop e-government applications such as e-tax.

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