Tax Administration Strategies of Rivers State Internal Revenue Service and Tax Compliance by the Informal Sector

Abstract

In an attempt to diversify revenue from oil sources to non-oil tax revenue, Rivers State, like other States in Nigeria, is focusing on the informal sector. However, tax authorities face challenges in the tax administration of the informal sector and consequently, are rolling out different strategies to surmount the challenges. This study evaluated the effectiveness of strategies employed by the Rivers State Internal Revenue Service (RIRS) in the administration of the taxation of informal sector in Rivers State and whether the perception of three respondent groups: Directors, Area Assessment and Heads of Units of Rivers State Internal Revenue Service are different, It administered structured questionnaire on 15 respondents in the three groups. Findings from univariate analysis and Kruskal-Wallis Test show the respondents perceive the tax administration strategies of RIRS viz: Public awareness, Distraining Property/Closure of Business Premises, Collaboration with Trade Associations and Unions, E-Payment System, and Tax Identification Number are effective in contributing to positive tax compliance by the informal sector. It was also found that the perception of the effectiveness of the strategies in boosting tax compliance do not differ among the respondent groups. The study recommends RIRS should sustain the strategies in order to keep improving tax compliance by the informal sector. It is recommended that future studies should increase the number of respondent and the number of strategies.

Keywords

• Informal sector
• Perception
• Rivers State Internal Revenue Service
• Tax administration strategies
• Tax compliance

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