An Assessment of PAYE System of Taxation in Nigeria (TETFUND Sponsored)

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue XI, November 2021 | ISSN 2454–6186

An Assessment of PAYE System of Taxation in Nigeria (TETFUND Sponsored)

Uzamere Jim Onaiwu, & Ebhodaghe Lennards Arekhandia
Department Of Business Education, College Of Education, Igueben, Edo State, Nigeria

Abstract: This study was carried out with the aim to assess PAYE system of taxation in Nigeria. In order to actualize the objectives of the study, various literature and theoretical issues were discussed. The researcher administered one hundred (100) questionnaires to respondents, out of which eighty (80) were retrieved for the purpose of presenting and analyzing responses on issues raised in the questionnaires. The data used for the purpose of this research was gathered through primary source. The mass information generated from the questionnaires was analyzed, summarized and presented in tables using simple percentage. The hypotheses were tested using Z-test statistical tool. The findings from analysis revealed among other things that non availability of tax statistics, inability to prioritize tax effort, poor tax administration, multiplicity of tax stands a barrier to Pay-As-You-Earn (PAYE). In line with the findings of the study, therefore recommend that government should have the political will and should also ensure effective assessment, collection and utilization of tax revenue; this would improve Pay-As-You-Earn (PAYE) collection.

I. INTRODUCTION

Personal Income Tax which applies to all employees of a Nigerian company including expatriates as well as self employed individuals, partners and trustees is collected through Pay-As-You-Earn (PAYE). PAYE is the system whereby the employee pays tax on whatever income he earned from his employment in any particular month at the end of that month. It is a progressive tax arrangement whereby an employee pays income tax on his/her current earnings when it becomes payable. PAYE applies only to employees resident in Nigeria and employees of Nigerian government oversee. It applies to income from all sources, salaries, bonuses, commission, directors’ fees and any other income from employment among others (Yahaya, (2009). The employer deducts the tax from the employee’s monthly earnings including any allowances or benefits paid in cash or given to or on behalf of the employee. The total amount deducted by the employer from the employee’s earning at the end of every month is then remitted to the relevant tax authority (the relevant state board of internal revenue) (Samaila, 2012). Taxes are levied on individuals, groups, business or corporate bodies, by constituted authorities for funds use d by state in the maintenance of peace, security, economic growth and development and social engineering among others for the benefit of the citizenry (Chigbu, Akujuobi and Appah, 2012).
The nature and level of taxes vary according to the economic policies adopted by the various tax authorities. Intense advocacy for better tax incentives in many countries is a clear indication of growing concern for economic growth and

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