Taxing the Informal Sector (IS) and its taxpayers' compliance level has become a focus of attention in recent times by scholars and policy makers because of IS contribution to the country. IS seems difficult to tax because of administrative problems, human capital and personnel shortage, lack of record keeping, nature of its economic activities and cost implications. Therefore, there is need for better understanding of the concept, challenges, and methods of taxing, and of promoting tax compliance (TC) in the IS. It is against this background that the study examined IS and TC in Nigeria with its challenges and opportunities. Exploratory research design was adopted for the study with focus on literatures in the area of taxation, accounting and finance. The study concluded that taxing the IS is very important to any developing country as this achieved three things: revenue, growth and governance. Government needs to expand its tax net with much focus on the IS as any further neglect of this sector might dampen the moral of some individual taxpayers especially those in the formal sector who had been voluntarily paying tax. However, there is need for simplification of tax laws and establishment of tax courts, tax education and enlightenment, inter-agency collaboration and provision of Tax Identification Number (TIN), government should also exhibit accountability and transparency in order to build trust in the informal sector operators for tax compliance.
Tax Fraud (TF) and Tax Evasion (TE) has become an alarming situation in most developing countries. It has become a focus of attention in recent times by scholars and policy makers because of its impact on the economy. In Nigeria, the recent worldwide economy downturn through COVID-19 pandemic and decrease in price of crude oil and sales quantity in the global market has contributed to difficulties in the implementation of annual budget. This called for a shift to tax revenues (TR) but the major challenge is the high rate of TF and TE. One way of reducing this menace and to instil Tax Compliance (TC) is the application of Forensic Accounting (FA) techniques. Therefore, this call for better understanding of the concepts and ways of using FA to promote TC. It is against this background that the study examined FA, TF and TE in Nigeria. The study adopts exploratory research design with literatures from materials on taxation and accounting. The study concluded that since the traditional auditing techniques has failed to curb TF and TE because of its inefficiency and ineffectiveness of operation, therefore FA will expose, control and deter fraudulent practices on TR, and this will enhance good TR for the government. The study recommends that government should develop interest in FA, enforce tax laws and regulations on TF and TE with strict appropriate punishment on tax evaders, ensure transparency and accountability on TR, and further create forensic unit in tax offices with modern FA techniques equipment.
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