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The Effect of Tax Collection on Profitability of the Companies in Nigeria

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The Effect of Tax Collection on Profitability of the Companies in Nigeria.



The serious decline in the price of oil in recent years has to lead to a decrease in the funds available for distribution to the federal and state Governments.

The need for the state and local government to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance.

This need underscores the eagerness on the part of state and local government and even the federal government to look for new sources of revenue or to become aggressive and innovative in the mode of collecting revenue from existing sources.

Agudu (2004) states that though taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derivations from taxation, however, taxation is the most important source of revenue to the government, from the point of view of certainty and consistency of taxation.

Aguolu (2004) further mentioned that taxation is the most important source of revenue to the government. Owing to the inherent power of the government to impose the taxes, the government is assured at all times of its tax revenue no matter the circumstances.

The study focuses on identifying the means of taxation that has been utilized to promote fiscal redistribution of income, identify problems that militate against the use of taxation as revenue generation in the federal capital territory (FCT).


Over the years, revenue derived from taxes has been very low and no physical development actually took place, hence the impact on the poor is not being felt.

Inadequate tax personnel, fraudulent activities of tax collectors, and lack of understanding of the importance to pay tax by taxpayers are some of the problems of this study.

The issues mentioned above will therefore constitute the problems to be addressed by this research work.


  • Whether the tax rate has any significance on the profitability of companies
  • Whether the tax collected by the government has any significant impact on the survival of companies.


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Okon, E. (1997) Company Income Tax In Nigeria (unpublished Monograph) University of Port Harcourt

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