CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Due to the dynamic nature of the world technology today i.e. the age of computerization of our

society, there has been a need to automate the taxation systems. Broadly speaking, computer has

effectively attracted a great deal of attentions in recent time, due to its automation processes and

its effects in our society today. According to Principles of Taxation (POT) written by

Keynesian (2013), taxation is a payment levied by government for which no goods or service is

received directly in return-that is, the amount of tax people obtained from the provision of

particular good or service. Up until the early 1930s, it was universally accepted in principle that

governments should balance their budgets. Thus, the principle reason for taxation was to pay for

government expenditure.

However, according to UK Government (2003), electronic taxation (E-Taxation) is referred to

the online payment of tax by taxpayers. E-payment facilitates payment of direct taxes online by

taxpayers. To avail to this facility, taxpayers are required to have a net-banking account, with

any of the authorized banks.

Computer based online tax payment (E-tax payment) system is a computerized online payment

system which allows fast and easy monitoring and payment of taxes online.

The firm under study, Board of Internal Revenue (BIR) Calabar is a sector under government of

Cross River State which helps to generate revenue for the state government through tax payment

and other activities that they carry out. This sector was established in 1976 by a group of an

edict and they are government means of generating revenue for the state government. The sector

(BIR) under study are making use of manual methods which is slow in carrying out operation

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and also creates employment for individuals which is one of the fighting measures to reduce

crime rate and unemployment rate in our country today.

1.2 STATEMENT OF THE PROBLEM

The problems with the existing system are:

i. Poor horizontal, vertical and outward communication between the various departments

involved, because the system is standalone.

ii. Improper identification of taxpayers

iii. Problem to ensure that taxpayers who need information can obtain it accurately and on

time.

1.3 OBJECTIVE OF THE STUDY

The objective of this study is to engineer a software that will:-

i. Obtain and keep proper records on the number of taxpayer to avoid double payment.

ii. Retrieved and update tax payment records

iii. Generate monthly reports on tax paid.

1.4 SIGNIFICANCE OF THE STUDY

This work is so advantageous in that:

i. It will reduce mental and physical effort which is in the manual method or system.

ii. It will reduce the rate of manual method and time consuming and also ensure accuracy

processing.

1.5 SCOPE OF THE STUDY

This work is specifically concentrate on ascertaining the activities of the Cross River State tax

payment system. And it understudies the online tax payment system of Cross River State. The

study is limited to Board of Internal Revenue (BIR) Calabar.

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1.6 LIMITATION OF THE STUDY

Some limitations found during this research include:

a. Financial Limitation: - This is one of the major constraints, which has limited

the extensiveness of this work.

b. Time Constraints: - The time given for this research work was not enough to get

comprehensive information about the study because it is a broad work to be

carried out.

1.7 DEFINITION OF TERMS

Computer is management and business study (1978), defined a computer as an electronic

device that is capable of imputing and outputting stored in the computer system.

Payroll: list of employees and all their and salaries including their allowance and

deductions

Salary: this is usually a monthly payment for regular employment that on his / her work

done.

Shift allowance: This allowance paid to worker or shift basic.

Arrivers: this represents the accumulation of staff entitlement.

Rent subsidy: these represent the rent given to an employee for his or rent age.

This is the allowance granted to an employee who it s a pictorial represent of information

in data processing means of symbols.

Transport allowance: this is allowance given to a staff for his transportation to work.

SQL: structure query language a database payment language.

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 LAN: local Area network.

Tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal

entity) by a state or the functional equivalent of a state to fund various public

expenditures. A failure to pay, or evasion of or resistance to taxation, is usually

punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or

as its labour equivalent. Some countries impose almost no taxation at all, or a very low

tax rate for a certain area of taxation

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 CHAPTER TWO

LITERATURE REVIEW

According to Kunle (2013) The Nigerian e-tax system is surrounded by countless problems

which include: Little data available on the history of tax revenues or tax payers due to a lack of

proper records keeping system (Federal Republic of Nigeria, 1997). A lack of comprehensive tax

statistics and a centralized database for the existing ones (Federal Republic of Nigeria, 2002).

Deployment of limited man power and other necessary resources into redundant roles and job

Duplication of taxes and its negative effect on tax payers a problem resulting from a clash in the

governments fiscal responsibility and its fiscal power (Odusola, 2002). Deliberate attempts by

tax payers to evade taxes the aim of the e-taxation system is to provide the tax authority a

database with details of taxpayers and their transactions.

Belanger, et al (2006) This would reduce the issue of tax evasion and hence an increase in

government tax revenue. It would also allow taxpayers process their transactions online without

having to visit the office of the FIRS, reducing the workload on the resources available to the

FIRS and which consequently give room for the re-allocation of freed-up resources. The

objectives considered during the development of the e-taxation system include: Creation and

management an effective and efficient database to provide tax payers records, information/bio-

data for easy referencing. The provision of an alternative payment routes for tax payers so as to

encourage immediate tax payment and provide relief to those who find it an easier and more

efficient payment route. Which will be achieved by creating a web based system in which

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registered entities log-in and make payment. The availability of an alert system that to notify the

regulatory body of outstanding payment by registered entities and workers.

According to Ariyo (2010). The e-taxation system is to be developed for use by the tax authority

at the federal level for tax payment, record keeping and educational/awareness programs in

under-developed and developing countries with specific focus on the African continent.

A publication by the Peter, (2014) talk about introduction to computer-Tax payment as a

name given to an Integrated Tax Administration System (ITAS) that provides online services to

the taxpayer on a 24 hour basis. The Stride Magazine Odusola 2003) reveals that the system was

acquired by the Domestic Taxes Department (DTD) is to modernize tax service and

infrastructure, with the aim of reducing tax administrative and compliance costs, which is in

concurrence with who recognizes low costs of compliance as an essential principle for tax

administration.

Tumuhimbise (2011) E-tax refers to the electronic filing of returns, and it includes taxes

imposed on goods and services traded on line among others. It offers faster-faster services than

transactions via mail and they are safe and secure. Electronic tax filing, or e-filing, is a system

for submitting tax documents to a revenue service electronically, often without the need to

submit any paper documents.

Manly et al, (2005) said that electronic tax filing systems are an e-government application

that is being utilized with increasing frequency all over the world. Such systems are particularly

favorable for governments because they avoid many of the mistakes taxpayers make in manual

filings, and they help to prevent tax evasion by data matching the data houses developed using

electronic tax filings can allow tax inspectors to analyze declarations more thoroughly, and

enable policy makers to develop fairer and more effective.

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 Kun, et al, 2008) was viewed on Internet Explorer and returns are filed using a template

based on Microsoft Excel (Excel). Being internet based and as indicated in e-Registration it is a

24 hour application. All procedures to do with filing of domestic taxes and monitoring their

progress are handled by the E- Tax system. For web-based information systems to remain useful,

they must contain new, enhanced attributes. Argue that they are several success criteria for a web

site depending on the variety of goals such as selling, informing and advertising. The authors

further argue that web site success is audience specific and it should take account of diverse

perspectives of users and owners. It should be noted that sometimes these perspectives might be

even competing. For example, in electronic tax filing systems users are usually unenthusiastic to

pay tax and the site owner (government) is eager to collect it.

According to Satish (2012) the structure of the system allows users to openly interface

with the considering that procedures to be followed are all given on the web portal. As stressed

by transparency is essential for an effective tax administration system and the ITAS, The Stride

Magazine confirms, will provide an effective and transparent system across the domestic tax

regimes, adding that it will include, among others tax registration and return processing.

Stride (2009) said there are Procedures include in registration for online service access, filing

returns, registration for payment of taxes due to as well as follow up of any matters relating to

returns filed.

Sani (2011) there are two forms of taxation common to most countries, direct taxes to be paid by

the tax payer on his income, profit or asset owned. The other form, indirect taxes is imposed on

commodities before they get to the consumer, and are to be paid by the consumer not as taxes but

as a part of the selling price per unit of the commodity .For a taxpayer to be able to use the E-

Tax, The Income Tax requires that a taxpayer is registered as a user of a computerized system.

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The Stride reveals that registration is the very first interface between the taxpayer and the e-

Registration notes that registration starts with an application to register for a Tax Identification

Number (TIN) (a unique number assigned to every taxpayer registered under E-Tax, The reveals,

a taxpayer is able to register for all tax types.

Marshal (2014) reveals that introduction of electronic filing in E-Tax facilitates the

taxpayer is to fulfill the obligation of submitting taxes they have registered for. In this process, it

adds, the taxpayer obtains a return from the web portal saves the template on any storage devise

and takes time to file the return where after the return is validated before it is uploaded onto the

web portal. Validation, according to the e-filing instructions, helps a taxpayer correct all possible

errors. If successful, an auto-generated e-acknowledgement receipt is received by the taxpayer as

evidence of submission. If, according to e-Filing (URA, 2010), it is on the contrary and the

system detects and errors in the return, the taxpayer is given chance to amend the errors when

they are issued a Return Modified Advise Notice. E-filing (URA, 2010), observes that the filing

process has been separated from payment, thus ensuring confidentiality of data. The taxpayer can

also submit the return at any time convenient for them though it should be before the due date for

filing the return.

Peter (2011) reveals that payment of taxes can be done via the web portal through the payment

registration link. a taxpayer is required to fill in their details including amount to be paid, tax

type, preferred bank and method of payment among others. The system automatically generates a

Payment Registration Slip (PRS) with the details entered, which slip is printed and used for

effecting payment at the bank. FAQs (Ela 2010), however, notes that some tax types may require

a TIN on the PRS before the PRS can be generated. FAQs further reveals that on effecting

payment at the bank, the taxpayer does not have to go to URA (to submit their documents)

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because the bank sends reconciliation reports to the authority and the taxpayers account is

automatically updated before a receipt acknowledging payment is sent to the taxpayers web

portal account and copied to their email address.

James (2006) most company now uses computerized payroll system. A computerized payroll

system will not only resolve difficult problem but also it will provide fast process and accurate

calculation of the salary. According to Dave Rooses (2010) in his article on how payroll system

work. In manual payroll system there is so many possible errors that may be encounter but if the

payroll is computerized, payroll clerks will not need calculator to compute the salary of the

employee. Payroll is the sum of all financial records of salaries for an employee, wages, bonus

and deductions. In accounting, payroll refers to the amount paid to employee for services they

provided during a certain period of time.

According to Wikipe (2005). The employer are required to hold back the part of each employees

earnings because the money will used for paying the income taxes union dues and medical

insurance premiums that is responsible of the employee. (Fundamental financial and managerial

accounting concepts published by mc grave-hill international edition).

Payroll processing is actually a special- case purchases system in which the organization

purchases labor rather than raw materials or finish goods for resale. (Accounting information

system by the proponents will propose a system that is entitled computerized payroll system. It

will save time, produce faster result and will lessen the errors.

(Kayaga, 2007). In his view, they introduced E-tax and these are elements that constitute E-tax

service system. The E-tax service system includes many components which enable tax payers to

effectively use the system. These components are in most cases used by Business Enterprises.

The major components of the E-tax service system include the following.

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According to Stacy (2010) tax content services. This looks at the creation, maintenance and

management of E-tax. This system is used for reference of the tax matters when dealing with the

business enterprises. It has the tax application to model the details of the tax setup for all

companys tax requirements. Sub components include Basic tax configuration, tax jurisdictions,

party tax profiles, and country default controls and many more.

Hopkinton, 2010) said that Tax Content Repository. This stores data from the tax content

service, which would be used for reference in other components for easy management of the

system. The faster returns can be processed then faster tax payments can be put to work

managing cash flow, investing excess for a return.

Stacy (2010) Tax Service Request Manager. This requires only one representative who needs to

register for everyone in the firm to be able to use the services. This component manages the

access to all tax data and services, this enables Integration with E-tax services, integration with

tax service providers and eventually there would be a Standard interface for E-tax Suite

applications to add tax services to their business process flows, this will help tax agents and

advisers deal with the department more effectively.

(Stacey, 2010). Tax Determination Services. This looks at the different tax services and how best

they can be applied. Every tax within a tax regime has its own regulations that determine when

the tax is applicable, that is, when the tax needs to be charged or paid. The tax determination

contains two components including Tax Determination Management and the tax rule

management which manages the requirements and processes around automatic tax calculation

based on transaction details and tax setup information (Stacey, 2010).

(Stacey, 2010). Tax Record Repository. This contains the components used to record all the tax

documentations and transactions, which makes reference easy incase the need arises (Stacey,

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2010). Properties are conveyed free and clear of the tax and municipal claims, and charges of

whatsoever kind, depending on how it is designed separately for tax issues.

Tax Administration Services. This looks at the operations of the outstations to provide a

convenient option for persons to pay their taxes, without having to visit a tax office or pay

online. This one manages the accounting for all tax transactions. It would includes; Value Added

Tax (VAT), Income Tax (IT) filings and property tax many more.

Tax Reporting Ledger. This component manages the record Repository and the Tax Content to

enable reporting where the need arises. This reduces the time that would be spent by the revenue

officials preparing the reports for the stake holders.

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