Tax Evasion Case Study

Tax Evasion

Tax evasion has been defined as the efforts by individuals, firms and other entities to evade the payment of taxes by illegal means. In other words, tax evasion is illegal and a criminal offence. In fact, it has been described as an economic and financial crime in the interpretation section of the EFCC Act, 2004. Tax Evasion entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liabilities and this includes dishonest tax filings popularly called cooking the books such as under declaring income, profits or gains or over stating deductions.

According to Tanko Ashang, the bane of our society is that tax defaulters engage in tax evasion through various

If a person marries in order to reduce his tax burden he is practicing tax avoidance if he tells the tax authorities that he is married when he is not, then he is guilty of tax evasion. There is also an important distinction between a scheme under which no liability to tax arises that is tax avoidance and one which a charge arise but the tax cannot be collected in other words tax evasion. In the case of Federal Commissioner of Taxation v Westgarth Fullagar J put the distinction between Tax Avoidance and Tax Evasion the following succinct words: “The word avoidance is I think to be contrasted with the word evasion involves no notion of escaping by any device or artifice conveys simply the notion of actually escaping through not being called to pay” The word evasion would seem to be something more than avoidance but something less than fraud in the view of Dixon J in the case of Denver Chemical Manufacturing Co. v Commissioner of

On the other hand, as earlier stated, tax avoidance is the act of taking advantage of legally available tax planning opportunities in other to minimize one’s tax liability. The self-employed, employed and the professional class are not left out in the act of evasion and avoidance of tax that has eaten deep into our national fabric. Tax evasion has been used to refer to all cases of non compliance. In fact, there is no gainsaying the fact that there is lack of information of the extent of tax evasion and avoidance in Nigeria, since the task of gathering any form of statistic in a developing country like Nigeria is indeed real. M.C. Taylor stated the difficulty of gathering evidence on tax evasion in the following succinct words “It is only to be expected that evidence of income tax evasion, since it is an illegal activity is difficult to obtain in any Country. The Official’ Secrecy Act may also prevent an estimate of the extent of tax avoidance and evasion in Nigeria. Also in the United States, studies carried out on non-compliance indicate the general problems encountered in gathering statistics on tax evasion. Hence this problem should is not peculiar to