Nigeria Personal Income Tax (Amendment) Act 2011: Implications for Tax Administration and Enforcement

ABSTRACT This paper critically reviews the implications of Nigeria Personal Income Tax (Amendment) Act 2011 as they affect personal income tax administration in the hands of tax authorities as well as employers, employees and individuals as it relates to compliance issues of payment, collection, and remittance of personal income tax. This explorative study relied on the review of relevant literature on Personal Income Tax Administration in Nigeria and the reactions of stakeholders on the new income tax amendment legislation. The major implication of the Amendment Act is that it provides good combination of a relaxed tax regime that is more tax- payer- friendly than the principal Act, while also specifying stricter tax collection and enforcement regulations that prescribe stiffer penalties and controls over tax payments and remittance defaults. Against the background of these implications the involvement of professional tax and accounting bodies, and tax authorities in the education and enlightenment of employers and tax payers are considered imperative. KeyWords: Personal income tax administration; Personal Income Tax (Amendment) Act 201; Tax collection and enforcement regulations
  INTRODUCTION                                                         Personal Income Tax (“PIT”) according to Decree No.4 of 1993 is a tax imposed on the incomes of individuals, communities and families. It is also charged on the incomes due to a trustee or an estate. Since the enforcement of personal income tax through Decree No.4 of 1993, amendments have been made to this decree almost on 10year basis all in the effort to overcome challenges that are identified with the actualisation of the objectives of the tax regime. It has been evident that personal income tax in Nigeria had remained the most unsatisfactory, disappointing and problematic of the tax system in Nigeria. The problems associated with personal income tax have invariably influenced the spate of its amendment as deliberate efforts towards addressing the problems identified with it from time to time. The latest of such amendment is that contained in the Personal Income Tax (Amendment) Act 2011. This paper reviews the implications of the Personal Income Tax (Amendment) Act 2011 on personal income tax administration and tax revenue against the background of the challenges it seeks to resolve. The paper is divided into six sections addressing issues concerning: Concept and classification of Tax, Overview of Personal Income Tax system in Nigeria, Problems of Personal Income Tax system in Nigeria, Highlights of key changes and implications of the Personal Income Tax (Amendment) Act 2011, Conclusion and recommendation.