Abstract There are challenges facing tax system in Nigeria. Government agencies in Nigeria including federal tax offices have a great challenge in data management in term of data storage, access of data and data retrieving. Tax administration in Nigeria suffer from poor tax administration which could not enable the administration to meet increasing challenges and difficulties in taxation. One of the major challenges of tax system in Nigeria is multiplicity of tax which is bitterly complained by corporate bodies and individual. Adopting the tax administrative processes to technology such as Qitmeer public block-chain on a bigger scale than it is currently becomes an imperative. It will prevent depending solely on oil revenues and increase revenue from other non oil sources. Qitmeer public block-chain is the public chain serving the ecosystem of ethical finance and socially responsible investment for enhancing financial inclusion. Qitmeer public block-chain will ensure that Government is fiscally responsible by being accountable for the revenues generated and thereby win taxpayers’ confidence to improve voluntary compliance through mathematical model which can not be altered. The traceability feature in Qitmeer public block-chain ensures that the government that spends tax revenue should have some degree of accountability so that citizens make the connection between tax and fees they pay and services they receive in return. This paper argues that there is a need for efficient tax administration as a way forward to achieve economic development and growth in Nigeria. Adoption of Qitmeer public block-chain increase level of tax transparency, compliance and ultimately, tax collection, increase delivery of social services, greater transparency and better accountability which has been major problem of tax administration in Nigeria. Apart from storing information of tax payers’ data and facilitating sharing data among the stakeholders such as Central Bank of Nigeria, Nigeria Custom services, Corporate Affairs Commission and Nigeria Bureau of statistic through unique tax identification number, with Qitmeer public block-chain tax authorities will be able to identify taxable person and track hidden income which the tax system can access for information as the need arises.
Tax Administration in Nigeria Tax administration is the framework upon which Nigeria tax system is based. It deals with the powers and duties of relevant tax authorities as contained in the tax laws. Tax administration involves the procedures, principles and strategies adopted by any government in order to achieve effective tax planning, compulsory levying of tax, easy collection and proper accounting and utilization of the revenue collected. There are a good number of taxes payable by persons doing business in Nigeria. These include companies’ income tax, personal income tax, capital gains tax, value-added tax, education tax, technology tax, stamp duties, and withholding tax. Penalties are imposed for failure to pay taxes when due. A Tax Clearance Certificate is issued on demand when taxes due have been fully paid for three years immediately preceding the current year of assessment. A Tax Clearance Certiﬁcate is usually required for oﬃcial transactions with Government Ministries, Departments, and Agencies (MDAs). Taxes and Levies Approved List for Collection Act was enacted in 1988 to spell out the taxes and levies that can be collected by the different tiers of government. The purpose of enacting Taxes and Levies Approved List for Collection Act is to reduce the multi-dimensional problems arising from the multiplicity of taxes at state and local government levels and to create an investor friendly tax regime. Under the enactment each three tiers of government were given power to collect tax. The tax authorities of the three tiers of government are: Federal Inland Revenue Services (FIRS), State Boards of Internal Revenue (SBIR) and Local Government Revenue Committee. Taxes payable to the Federal Government are administered by the Federal Inland Revenue Service (FIRS), while those payable to the State Governments are administered by the State Boards of Internal Revenue (SBIRs) of the states. Local Governments also administer rates and levies collectible by them through their various councils. Taxes to be collected by each tax authorities are stated below. Part I - Taxes to be Collected by the Federal Government (a) Companies income tax.
(b) Withholding tax on companies, residents of the Federal Capital Territory, Abuja and non-resident individuals.
© Petroleum profits tax.
(d) Value added tax.
(e) Education tax.
(f) Capital gains tax on residents of the Federal Capital Territory, Abuja, bodies corporate and non-resident individuals.
(g) Stamp duties on bodies corporate and residents of the Federal Capital Territory, Abuja. (h) Personal income tax in respect of:
(i) members of the Armed Forces of the Federation;
(ii) members of the Nigeria Police Force;
(iii) residents of the Federal Capital Territory, Abuja; and
(iv) staff of the Ministry of Foreign Affairs and non-resident individuals.
Part II - Taxes and Levies to be Collected by the State Government (a) Personal income tax in respect of: (i) Pay-as-you-earn (PAYE); and
(ii) direct taxation (self-assessment).
(b) Withholding tax (individuals only).
© Capital gains tax (individuals only).
(d) Stamp duties on instruments executed by individuals.
(e) Pools betting and lotteries, gaming and casino taxes.
(f) Road taxes.
(g) Business premises registration fee in respect of: (i) urban areas as defined by each state, maximum of- N 10,000 for registration, and N5,000 per annum for renewal of registration; and
(ii) rural areas- N2,000 for registration, and N1,000 per annum for renewal of registration. (h) Development levy (individuals only) not more than N100 per annum on all taxable individuals.
(i) Naming of street registration fees in the state capital.
(j) Right of occupancy fees on lands owned by the state government in urban areas of the state.
(k) Market taxes and levies where state finance is involved.
Part 11 - Taxes and Levies to be Collected by the Local Government (a) Shops and kiosks rates.
(b) Tenement rate.
© On and off liquor licence fees.
(d) Slaughter slab fees.
(e) Marriage, birth and death registration fees.
(f) Naming of street registration fee, excluding any street in the state capital.
(g) Right of occupancy fees on lands in rural areas, excluding those collectible by the federal and state governments.
(h) Market taxes and levies excluding any market where state finance is involved.
(i) Motor park levies.
(j) Domestic animal licence fees.
(k) Bicycle, track, canoe, wheelbarrow and cart tees, other than a mechanically propelled truck.
(1) Cattle tax payable by cattle farmers only. (m) Merriment and road closure levy.
(n) Radio and television licence fees (other than radio and television transmitter).
(o) Vehicle radio licence fees (to be imposed by the local government of the state in which the car is registered).
§ Wrong parking charges.
(q) Public convenience, sewage and refuse disposal fees.
® Customary burial ground permit tees.
(s) Religious places establishment permit fees.
(t) Signboard and advertisement permit fees.
Challenges Facing Tax Administration in Nigeria An efficient and effective system of tax administration, there must always be a consideration of the challenges which militate against the creation and maintenance of such a system. In Nigeria most of the issues faced cut across the three tiers of Government. These issues are without reference to which tier are affected. The major challenges faced in tax administration in Nigeria are discussed below:
Multiplicity of taxes is a major challenge facing tax administration in Nigeria. Multiplicity of taxes has to do with levying of tax on the same income by two or more jurisdictions. It is a situation that results from taxing an earning more than once. The term “multiplicity of taxes” is not a recognized word in the arena of taxation as such and “thus, the term seems to be peculiar to Nigeria fiscal lexicography”. Individual taxpayers as well as corporate bodies are all complaining about the triple effects related with the repetition. Bad administration of tax in Nigeria leads to lack of transparency in the management of taxpayers’ money. Tax evasion characterizes the major problems of tax administration in a developing countries including Nigeria. More so, unavailability of database of all individuals that are taxable, the tool use for assessing and collecting of taxes are inadequate and the absence of firm methods in place are issues that should be addressed for an effective tax system. There are no efforts to collate or analyse the limited data available let alone of storing the data, making it possible to be assessed or retrieved. This suggests that the Nigerian tax system is inefficient and ineffective in its entirety. The Nigerian tax laws are so complex that sometimes it is very difficult for even the educated individuals in the society to understand. Due to the complex nature of Nigeria’s tax laws, it is not easy for ordinary taxpayers to understand and sometimes even the learned officials find it difficult because of the problematic nature of the tax laws. Numerous tax laws provides for payment of tax refunds to taxpayers who with candid and sincere claims; this is not the case in real practice. Some provisions of the law, for example, VAT deduction at source by agents of the government and in some cases the high rate of withholding tax; make the problem of tax refund a perpetual feature of the tax system in Nigeria.
What is Qitmeer Public Blockchain Qitmeer is the first public chain that is dedicated to serving the ecosystem of ethical finance, socially responsible investment, which aims to act as the overall financial infrastructure to seamlessly converge all these areas, thereby enhancing financial inclusion. The Qitmeer is the core network of HLC Foundation which supports R&D of Qitmeer since initiated the beginning of 2018 and then launched the open-source code through GitHub on June 30, 2019. Whereas presently, the name Qitmeer, Meer and Kahf have been newly selected to brand the public chain, coin and wallet respectively. Qitmeer stands for the state of the art of distributed ledger technology up to present, which adopts an open and fault-tolerant Block DAG technology that is rooted in the typical chain data structure. Meanwhile, through the optimization of ledging, the fully decentralized, more efficient and truly fair collaborative model of mining is used to achieve a desirable balance of typical blockchain metrics among the security, openness, fairness and scalability. Qimeer supports the interoperation with all the mainstream blockchain network through cross-chain protocols, as well as to interact with standard APIs, such as value transfer based on atomic swap and smart contracts, thereby enabling Qitmeer to be a global and inclusive public chain.
Features of Qitmeer Public Blockchain
Qitmeer blockchain has the potential to eradicate mistakes and detect deceptive activity because of its ability to be a public ledger across multiple unknown parties. A distributed digital depot can autonomously confirm the legitimacy of tax payers, policies and transactions by presenting a comprehensive historical record. Validation and verification form the nucleus of the blockchain business case, which can improve many tax processes.
Qitmeer blockchain is essentially a distributed database of records or public ledger of all transactions or digital events that have been executed and shared among participating parties. Each transaction in the public ledger is verified by consensus of a majority of the participants in the system. And, once entered, information can never be erased. The Qitmeer blockchain contains a certain and verifiable record of every single transaction ever made. To use a basic analogy, it is easy to steal a cookie from a cookie jar, kept in a secluded place than stealing the cookie from a cookie jar kept in a market place, being observed by thousands of people. The Qitmeer blockchain technology facilitates the implementation of decentralized IoT platforms such as secured and trusted data exchange as well as record keeping. In such an architecture, the Qitmeer blockchain serves as the general ledger, keeping a trusted record of all the messages exchanged between smart devices in a decentralized IoT topology.
Source: HLC Technical White paper.
Efficiency of Tax Administration through Qitmeer Public Block chain
Qitmeer blockchain streamlines tax collection mechanism. It assists tax authorities to advance a solid base for taxpayers; restructure the means and methods used for collection and end multiplicity of taxes, which has been a reprieve to the industrial sector and the economy as a whole. Also Qitmeer blockchain ensures that the approved taxes and levies streamlined and strictly followed by the three tiers of the government. Qitmeer blockchain ensure good, effective and efficient tax administration, whereby tax administration is handled by professionals and trained personnel. The personnel of the tax authorities of each of the three tiers of the government need to be trained and retrained to bring the best from them and also Qitmeer blockchain will instils discipline on them. Qitmeer blockchain features of filling and payment online will reduce the time of compliance and cost associated to it and also accept tax technology in support of electronic remittances and filling of returns which will ease the burden on taxpayers, ease human contact existing between the taxpayers and the tax officials. This can assist in checking sharp practices and make doing business easier. Qitmeer blockchain will simplify the tax laws, make it certain and clear. The tax laws will be phrased to ensure that taxpayers and tax officials understand it clearly. Cases of genuine losses declared by any company will be addressed as an issue that is separate by means of tax audit and transfer pricing instead of using the same brush to paint all companies with. Concerning the commencement and cessation rule, Qitmeer blockchain will ensure companies pay tax on the actual profit using the preceding year basis from the beginning to the end (if the business ceases to operate). Qitmeer blockchain also simplify tax administration with automated payment systems to tract payment made by tax payers, issue electronic receipts and withhold tax credit notes where applicable. Qitmeer blockchain support tax authorities of the three tiers of the government to embark on refunding genuine overpayment of taxes. The government as a matter of urgency make funds available for refund. As this will boost the confidence of tax payers on the government. Qitmeer blockchain improved accountability and communication of uses to which tax revenue is put, this can be utilized to improve the ability of tax authorities to achieve efficiency in collection of revenue. Where Government is accountable for revenue collected and taxpayers have free and easy access to tax information, it improves voluntary compliance, as taxpayers will see that they have a stake in the tax system as the revenue collected is utilized on their behalf. Qitmeer blockchain increase inter-governmental and inter-agency collaboration, co-operation and co-ordination this entails collaboration by authorities in the three tiers of Government on issues, which affect them collectively and individually. Qitmeer blockchain will establish Unique Tax Identification Number (U-TIN), which seeks to create an automated national database of all taxpayers in Nigeria at all levels of Government. The U-TIN system will allow for easier identification of taxpayers across the country and resolve issues such as; multiple taxation, conflicts over tax jurisdiction by different States or Local Governments and also allow Government to utilize the data for several other purposes. Collaboration and co-operation will also help in area such as exchange of information, prompt remittance of taxes collected on behalf of other agencies or tiers of Government and payment of tax arrears and debts owed by one tier to another. In this way, the U-TIN system can become an important instrument for audit.
Qitmeer blockchain create reliable, comprehensive and inter related suite of data to increase the degree of capture of potential taxpayer outside the tax net or track those within the tax net but which have defaulted in complying significantly. Qitmeer blockchain create advance tax administration for robust database management system which at the minimum manage the details of companies and individuals including date of birth, health profile, work profile, educational profile etc for both citizen and resident. Such database will be connected to different agencies such as immigration, customs, health, financial, security system which tax authorities can access for information when necessary.
Source: HLC Technical White paper.
Adoption of Qitmeer blockchain ensure that tax authorities have degree of accountability so that citizens make the connection between tax and fees they pay and services they receive in return. It will also improve tax payers’ confidence in paying their tax willingly thereby safeguard efficient tax administration and powerful means for tax enforcement. Qitmeer blockchain assist in developing a major file system to assigns a unique number to each tax payer. This unique number directly helps in identifying assessing and collecting direct taxes, such as personal income tax, company income tax, and the property tax. In this way, the master file can become an important instrument for audit. If the tax payer identification number is connected to other means of identification, such as drivers’ licenses or passport, it can be a potentially powerful means for tax enforcement.
The mutual relationship between taxation and public expenditure is evident that taxpayers are well disposed to pay their tax willingly when they see evidence of redistribution of wealth by the government in providing efficient public transportation, efficient waste collection, regular water and electricity supply system, well-maintained and well-drained roads and sidewalks, availability of educational facilities and functional health services in the country. Qitmeer public chain solves the challenges of tax administration in Nigeria both from tax authorities and the taxpayers with a sustained sound tax system and constant tax reforms. Efficient tax administration safeguards the objectives of tax system, it prevents depending solely on oil revenues and increase revenue from other non oil sources for better economic development in Nigeria.
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