TAX AUDIT EFFECTIVENESS AND TAX COMPLIANCE IN NIGERIA

In Nigeria, taxation plays a vital role in generating revenue for the government to fund public goods and services. However, tax evasion and non-compliance have remained significant challenges, resulting in substantial revenue losses. The current study examined tax audit effectiveness and tax compliance in Nigeria. The main purpose of the study was to examine the extent to which tax audit effectiveness impacts on tax compliance. Thereby reducing tax evasion. The study employed a descriptive survey research design, with respondents drawn from staff members of the Federal Inland Revenue Service (FIRS) in Benin City, Edo State. A sample of 84 respondents were selected from a total population of 538 using the Taro Yamane’s sample size determination formula at 10% standard error of estimates. Data obtained from the study were analyzed using descriptive statistics, simple percentages and frequency. Result obtained from the study revealed that the effectiveness of tax audit significantly impacts on tax compliance. Similarly, the findings shows that audit frequency, audit quality, and the penalty imposed on defaults, significantly impacts on tax compliance. Based on the findings of the study, it is concluded that despite the relative significance of effective tax audit on tax compliance, the process is bedeviled with a number of challenges such as inadequate enforcement mechanisms, corruption, and a lack of taxpayer education. Following the findings of the study, it is recommended that, audit firms should ensure auditors’ independence and adherence to professional standards, while also implementing advanced data analytics and automated systems can streamline the audit process, making it more efficient and reducing opportunities for corruption. More so, tax enforcement agencies should implement stringent penalties for tax evasion and ensuring their consistent application can deter non- compliance.