Deepening Tax Compliance Culture in the Educational Institutions of a Private Character in Anambra State, Nigeria

Abstract

Gap created by none definition of ‘educational institutions of public character’ in any of the Nigerian tax laws for the purpose of ascertaining income tax and capital gains tax has generated serious arguments and legal debates between the operators of educational institutions of a private character and the relevant tax authorities in Nigeria. Among the profits exempted from the tax payment as provided in section 23(1) (c) of the Companies Income Tax Act, 2007 (as amended) are the profits of any company engaged in educational activities of a public character in so far as such profits are not derived from a trade or business carried on by such company, and this is also contained in paragraph 13 of the third Schedule of Personal Income Tax Act, 2011 (as amended) and section 26(1) (a) of Capital Gains Tax Act, 2004 (as amended). These sections of the tax laws have been misconstrued by many operators of private schools in Nigeria to mean ‘all-inclusive’; thus, leading to low compliance in paying taxes by this circle. Consequently, it has led some persons and group of persons to demand for further insights and enlightenment on the relevant provisions of federally administered tax laws and tax administration as it concerns private schools in Nigeria. Against this backdrop, this paper attempts to deepen tax compliance culture in the privately owned educational institutions in Anambra State, Nigeria. It does this by examining certain tax concepts and laws, explaining the responsibilities of operators of private schools on tax matters and providing them with information on the requirements of the tax laws as they affect this group and for education of the public at large. This paper is organized to eradicate tax evasion, while minimizing tax avoidance and eliminate any form of multiple taxation occurring within this circle. It concludes that improvement in tax education of this stakeholder would likely optimize tax revenue collection and voluntary compliance culture. Among others, this paper recommends that FIRS should have more effective and efficient structure of taxpayers’ service department that would support in addressing the taxpayers’ grievance and regularly educate all the stakeholders in improving tax compliance culture.

Keywords: tax, private educational institutions, public character, tax management, Nigeria

JEL Classification: K34, M48