The Impact Of Taxation Law On Investment Activity In Nigeria (A Case Study Of Global Soap And Detergent Industry Ltd Ilorin)

Project and Seminar Material for Accountancy / Accounting

The Impact Of Taxation Law On Investment Activity In Nigeria (A Case Study Of Global Soap And Detergent Industry Ltd Ilorin)


Chapter One


Introduction

1.1 Background of the Study

Taxes are the most important source of government revenue. A tax can be defined as a compulsory levy imposed by a public authority in one’s incomes, consumption and production of goods and services. Taxes are levied on personal incomes (consisting of salaries, business profit interest income dividend royalties etc) company profits, petroleum profit capital gains and capital transfers.
For a payment or collection to be considered as a tax, it should posses the following characteristics.

  1. It is a compulsory payment imposed by the government on the people residing in the country. Since it is a compulsory levy, any person who refuses to pay a tax is liable to punishment. A levy the payments of which is voluntary is not a tax buy a contribution or donation.
  2. A tax must be for common use. It must be for common good, the government uses the revenues collected from taxes for providing hospitals, schools, public utility services etc. which benefits every citizen of the nation.
  3. A tax is not levied in return for any specific services rendered by the government to the taxpayer. An individual cannot ask for any special benefit from the government in return for the tax paid by him or her.

1.2 Objective of the Study

The objective of writing this project work is to view the impact of taxation law on investment activities in Nigeria.
In view of this fact, the study will take a look at whether business activities management recorded or prepared in their financial statement as stipulated by the tax law.

In the course of the study the researcher shall also take a look at the concept of tax law in Nigerian and also make suggestions and recommendation on taxation in Nigeria.


1.3 Significance of the Study

This study would help in enlightening manager’s accountants, auditors, Business consultants, tax collectors financial manager, government (federal, state and local joint tax board state internal revenue board and federal board of Inland Revenue board, about the impact of taxation law on investment activities in Nigeria.

It will also give the likely suggestion solution to the problem-encountered in taxation law and also highlight the necessary improvement on taxation law on investment activities Nigeria.


1.4 Scope of the Study

The study of the impact of taxation laws on investment activities in Nigeria could be extensive since there are lots of different business activities.

In Nigeria such as manufacturing wholesales; retail, banking insurance, investment, financing, shipping, road and transportation of tax payment affect the firm in an industry.

The extent of this research is limited to the study of taxation and effect on a company or two company’s activities in an industry. This impact on company is typical of others and industry.

This project research work also examines the impact of pay as you earn system of tax collection of purchasing power of industry in pay employment and small trades concern.

Methods’ sending of some of the tax liabilities has also been considered in this course o for the research work.
Government efforts in providing a conductive economic environment that would inspire new in encourage existing one towards a better performance through the provision on incentive and tax benefit covered in this project.


1.5 Research Methodology

The method of the study is a very crucial aspect in research work. However, several research methods are opened for the use of the researcher, but the choice of method will assist in evaluating the adequacy and efficiency of the research finding and conclusion.

Therefore, selecting a proper method of investigation into a problem is a key consideration for this study due to the fact that the topic being studied is not the type that every organization appreciates its importance achievement of organization objectives. For this reason, the researcher as a student decided to use personal interview in gathering the secondary data required for the desired result.


1.6 Definition of Terms

Tax:

A tax can be defined as a compulsory levy imposed by the government of a nation on the incomes, consumption and production of goods and services of the citizen.

Law:

It is a system of rules that a society or government develops in order to deal with business agreement, social relationship and crime.

Investment:

It is the activity of buying shares or putting money into a bank account in order to obtain a return informs of divided or interest.

Activity (IES):

This can be defined as the services that required certain number of time and skill.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary

During the course of writing this project, it was observed that the yearly improvement on Board o internal Revenue is worth commending. Also, it was realized that the board has a committee that does a yearly appraisal of their performance and more over recommends or makes suggestion to their problems.

On the aims and objective of taxation policies there are achievement on this line in fact, tne s:a:e government has been able to realize its goals in areas like improvement on standard of living and eradication of unwanted commodities in the state.


5.2 Conclusion

Through the gap between rich and the poor is difficult to fill, then there is an improvement on numbers o general working populace getting a fair deal of life through salary earnings on the contribution of taxation, there are several method that have been used to analyze the contribution of the tax policies in the state. The effect c fiscal incentive on investment behaviour of Kwara state taxation policies.

The rate of industrial development and business diversification where liked into and enjoying a netter share of industrial development in the countries.


5.2 Recommendations

In an institute of charted accountant journal, it was observed that the civilian government promised in 1979 to reduce the top rate of tax for individual from 70% to 50% and increase the tax bond from 30,000 to
56,000. This proposal, which was not enacted into law would have reduced the burden of personal income taxation on a number of salary earners and restore additional spending power into the economy. It is hope that present government will consider the proposal to scale down the personal income tax rate whenever to review the tax laws.
The high rate of the price galloping in the economy today has called for a way of measuring profit of a business for tax purpose. It is a fact that inflation over state the profit figure shown on the financial statement and method has been adopted to make adjustment as many be necessary to reflect the true position of earning in tie statement of comprehensive income. If items in the statement of comprehensive income are adjusted property to show the effect of inflation the profit declared there in will be reduced.

A reflection of the impact of inflation as reported in the financial statement must have its advantage effects on cash flow. One of such advantage is now it can be used to minimize the burden of income tax on companies and there by add to the net cash flow of the business

A deferment of payment of tax or minimization will yield a comfortable cash surplus to companies.

  1. The government should help ease the burden of taxation by reducing the rate of tax and also increase the special levy on banks tax in creative or loan for building should be granted.
  2. In the manufacturing and trading concern the tax on the returns on investment is quite high and discouraging the following recommendations are made to the government to ease the burden of taxation.
    • Should reduce the rate of tax currently in force as to create growth in private sector.
    • Reduce the level of excise duties
    • Private incentive that will enumerate healthy and profitable private sector, which will in turn provide or creative more jobs for the citizens and also help to keep private down.

Business depends on the government for it survival.

It is the duty of the government to provide incentive and tax benefits to the private sector.
Also, reliable infrastructure and conductive economic environment that would give inspiration to new investors while assisting old ones to perform better.


The Impact Of Taxation Law On Investment Activity In Nigeria (A Case Study Of Global Soap And Detergent Industry Ltd Ilorin)


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The Impact Of Taxation Law On Investment Activity In Nigeria (A Case Study Of Global Soap And Detergent Industry Ltd Ilorin)


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