TAX ENFORCEMENT PRACTICES AND TAX COMPLIANCE IN NIGERIA

Abstract

This study examined the relationship between tax enforcement practices and tax compliance in Nigeria, with emphasis on tax audit and penalties/interest as dimensions of tax enforcement and voluntary compliance rate and tax gap as measures of tax compliance. The study adopted a cross-sectional survey research design. The population comprised 900 personnel of the Nigeria Revenue Service (NRS) across 26 tax offices in the South-South region of Nigeria, from which a sample of 277 respondents was determined using the Taro Yamane formula. Data were collected through a structured five-point Likert-scale questionnaire, with 230 valid responses retrieved and analyzed using Pearson correlation and linear regression at the 5% level of significance. The findings revealed significant positive relationships between tax audit and voluntary compliance rate, penalties/interest and tax gap, tax audit and tax gap, and penalties/interest and voluntary compliance rate. The study further established that tax enforcement practices have a strong and significant relationship with overall tax compliance. Consequently, all four null hypotheses were rejected. The study concludes that effective, transparent, consistent, and technology-driven tax enforcement is essential for improving voluntary tax compliance and addressing tax gaps in Nigeria. It recommends strengthening risk-based tax audit capacity, improving the examination of taxpayer records, and ensuring the fair and consistent application of penalties and interest to enhance compliance and government revenue generation.