CHAPTER ONE
INTRODUCTION
In Nigeria, one of their major problems is the problem of generating income through taxation. Since it is known to everyone that taxation is a way of generating income to the government, it is not suppose to be a problem especially in corporate taxation. Developed countries like America have effective corporate tax system which has gone a long way to making their economy better. However, this tax being paid by business organization also has effects on their profit both in a positive and negative way which is the purpose of this study.
BACKGROUND TO THE STUDY
Corporate taxation serves as a vital factor in the economic planning and development of a nation as well as social change. In Nigeria, in context, income tax was first introduced in 1904 by Lord Lugard who enacted the first income tax statue when he was the High commissioner for Northern Nigeria. The colonial government in Nigeria introduced various taxes in order to tap the financial resources from the people for their own personal operations. In that situation, government taxation was an extension of the network exploitation of the colonized people. The post colonial states unavoidably inherited and sustained taxation as one of the government sources of revenue. Tax has been defined by so many people in the different ways. An oxford advanced learners dictionary by Hornby, A.S, (1977) sees tax as money compulsorily levied by the state or local authorities on individuals, properties, or business. Amaechina, P.U (1995) defined tax as a levy which a government imposes on the income of the citizens of a state for which the government makes no direct benefits to the tax payer (s). Tax according to Agyes A.K (1983) is the transfer of resources from private sector to public sector in order to accomplish some of the nation economic and social goals.
However, the universality of taxation accounts for its description as a popular way of raising revenue by Turner and Hunt (Okoye 1998). In that light or view, Benjamin Franklin is quoted to have argued that in this world, nothing is certain but death and tax. The corporate tax we know was introduced in 1965 in Britain. Companies are taxed at different rate from individuals and union corporate business was followed during the second world war by the recent development of this tax is attributed to the fact that until after the second world war, the corporate form of business was practically non-existing in Nigeria. Being recent, it has therefore, not received as much adequate attention from the populace as personal income tax has. However, with the growth of the economy, the corporate sectors has expanded considerably bringing more; sharply into focus the problems of taxing corporate income and at exploiting a potentially sources of revenue. Over one thousand (1000) companies were subjected to company’s income tax in 1963 compared with only about three hundred and fifty (350) in 1960, comparing these figures with the great number of business organizations now in existence presently we have over three thousand companies which are subject to company’s income tax. Companies income tax has become crucial not only from point of view of revenue but also from the point of rivals of stimulating rapid industries. Also, this has answered one of the reasons why government has so much interest in tax as a source of revenue. The huge sum of money generated by the government from corporate tax has made them to set out several decree/Act in respect of corporate tax.