PRACTICES OF ACCOUNTING FIRMS IN TAX AVOIDANCE THE NIGERIAN EXPERIENCE…

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Abstract
This research work examines the strategies and practice of accounting firms in tax avoidance (the Nigerian experience) and also why businessmen avoid tax payments, to what use is taxation to investors and business and how taxation weaken companies financially. The sample size for the study to select the respondents, (120) questionnaires were designed and administered while (100) were returned. The researcher used simple percentage (%) and chi-square (X2) analyze the data and test of hypothesis. 
From the analysis of data, it was discovered that tax avoidance has significant impact on corporate profit, also corporate tax affect revenue generation of any government. In the light of these findings, it was concluded that tax with significant impact on revenue generation and avoidance have resulted to poor infrastructural development of many nations. Finally, the following recommendations were made amongst others; government should tighten the various possible loopholes that are capable to create avenues for tax avoidance, government should make it a point of duty to check the activities of the accounting firms in connection with tax avoidance.
CHAPTER ONE
INTRODUCTION
1.1  Background to the Study
Taxation is the aspect of fiscal policy of government that deals with the raising of revenue. Christonson & Murphy (2004, pp.37-38) assert that in economic terms, taxation transfers wealth from corporate organizations and business to the government of the nation. A fund generated from taxation has been used by states and their functional equivalent throughout history to carry out many functions. In buttressing the above opinion US General Accounting office (2003), notes that most modern government also use corporate taxes to fund welfare and public service, and these services can include education system, pensions for the aged, to fund foreign and military aid, public transportation and to influence macro-economic performance of economy.In societies with interests in business, the role of accounting firms in tax avoidance cannot be ruled out. 
Though in the past, accounting and auditing services formed the core business for accounting firms, but today, it is a complete different issue. Sikka & Hampton (2006), opine that the state guaranteed monopoly of external auditing has been the making of accounting firms unlike other consultancy business, it gives them comparatively easy access to company executives and provides an opening to impress potential clients with zeal about meeting deadlines, attention to details to the value of surveillance, judgement, control and related implications of cutting across costs and inefficiencies. In the real sense, accounting firms have applied their strategies and practices in taxation in different ways. 
They have used their expertise skills in ensuring that their clients costs or expenses are reduced to the lowest minimum.In the course of carrying out their roles for their clients, or corporate organizations they are being accused of growing profit and reducing taxes to the  detriment of the state to provide social infrastructure for the populace.Commenting on the above view Sikka & Wilmot (1995, p.184) contend that accounting firms have long been identified as key players in the “rules avoidance” and have further enhanced their credentials by developing and marketing a variety of tax avoidance schemes to enable their audit clients and others report higher profits.In contemporary entrepreneur culture, tax avoidance is promoted as a natural inevitable and a desirable pursuit. Ernest & Young Partner (n.d) claimed that “tax is a cost of doing business. 
So naturally good manager will try to manage this cost and the risk associated part of good corporate government”. (Sikka, 2004, p.189) US senate joint committee on taxation (2003) and OECD (1996) reported four types of tax avoidance schemes utilized by accounting firms, to include transfer pricing abuse, conduct situation (Treaty shopping), routing and potential government abuse of tax sparing. In the same vein, accounting firms sell tax avoidance schemes through presence network of law forms, investment advisory firms, securing opinion letters, non-disclosure agreement etc Sikka (2004, p.192) and (US joint committee on taxation, 2003).
Tax avoidance occurs when the taxpayer is exercising his legal right under the tax law, makes the best use of available reliefs, allowance exemptions etc to pay the least possible tax. And this is achieved through the services of tax experts who exploit various loopholes in the tax laws to reduce liability.Against the backdrop, a country’s corporate tax system and the strategies and practices of accounting firms in tax avoidance especially in a democratic setting like (Nigeria) is often a reflection of its communal values or the values of those in power.
1.2  Statement of Problem
This research work is aimed at ascertaining if tax has helped in revenue generation in Nigeria. It also looks on how tax avoidance has significant impact on corporate profit. The loopholes accounting firms used to avoid tax.
1.3  Research Questions
To enhance the progress and development of tighten the loopholes accounting firms uses to avoid tax, more effort is required towards achieving the review of tax law.This implies that taxation which was established primary to raise revenue to finance government expenditure can help to answer the following questions:
1.   Is it that the role of accounting firms in profit pursuit in corporate organization?
2.   Are there various strategies and practice of accounting firms used in tax avoidance?
3.   Is that there are various strategies and practices of accounting firms in selling tax avoidance?
4.   Are there anti-tax avoidance measure provision in Nigeria?
1.4  Objectives of the Study
The objectives of any research are the mirror image of the research questions. On this note, the objectives of the study are stated below:
1.   To find out the role of accounting firms in profit pursuit of corporate organization.
2.   To find out the various strategies and practices used by accounting firms in tax avoidance.
3.   To determine the various strategies and practices used by accounting firms in setting tax avoidance scheme.
4.   To evaluate the anti-tax avoidance provisions in Nigeria.
1.5  Significance of the Study
The importance of this study cannot be over-emphasized. The study will be of great importance study and relevance in the following ways:
1.   It will assist the government in re-structuring her tax schemes and tighten all the loopholes capable to create avenues for tax avoidance.
2.   It will assist accounting firms and other professional bodies associated with tax matters to improve on their strategies and practice and make public disclosure about such activities.
3.   It will assist those in authority charged with the responsibility of legislating, executing and interpreting tax avoidance laws.
4.   It will enlighten business on the need to pay taxes out of profit genuinely and support government in discharging their civil responsibility to the people.
1.6  Statement of Hypotheses
A hypothesis is a tentative answer to a research question, it is often stated in the form of a relationship between a dependent and independent variable. It is a conjectural statement of the relationship between two or more variables.        
Hypothesis OneHo:  Strategies and tactics used by accounting firms to sell schemes that enables their clients avoid corporate tax have no impact on their corporate taxes.
Hi:   Strategies and tactics used by accounting firms to sell schemes that enables their clients avoid corporate tax have impact on their corporate taxes.
Hypothesis TwoHo:  Strategies and practices of accounting firms in corporate tax avoidance have no significant impact on corporate profit.
Hi:   Strategies and practices of accounting firms in corporate tax avoidance have significant impact on corporate profit.
Hypothesis ThreeHo:  Strategies and practices of accounting firms in corporate tax avoidance have no significant relationship with corporate cost reduction.
Hi:   Strategies and practices of accounting firms in corporate tax avoidance have significant relationship with corporate cost reduction.
1.7  Scope of the Study
This study examines the strategies and practices of accounting firms in tax avoidance as the Nigerian experience especially in Lagos and Edo State. This study will illustrate the role of the accounting firms using strategies and practices as its impact on organizational performance in Nigeria between 2008 – 2013.For the course of this study, the researcher used a sample size of 100 for effective survey.
1.8  Limitation of the Study
The study is faced with some constraints which may likely affect the generalization of findings, the constraints include the following below:
-   Geographical Coverage: Factor that may likely affect the work is the issue of investigating all accounting firms in the country. Due to the spread of accounting firms all over major cities in the country, the researcher could not be able to cover the whole areas. Hence, emphasis was focused on only Benin City and Lagos which I think could affect the generalization of result.
-   Problem of sourcing for material: The research was faced with problems of getting current materials, textbooks, journals, seminar papers in relation with this research topic. The University of Benin library are outdated for this research work. In the final analysis most interviewed and investigated could not give some vital information that would have acted as ingredients in the work.
1.9  Definition of Terms
-   Tax: Tax is a financial charge or other levy imposed on an individual or legal entity by a state or functional equivalent of a state.
-   Corporate Tax: This refers to a direct tax levied by various jurisdictions on the profits of an organization.
-   OECD: Organization of Economic Cooperation and Development.
-   Avoidance: Arranging one’s affairs so as to pay the accounting firm smallest amount of tax required by law.



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