Assessing the compliance level of capital gains tax in Nigeria: Moderating role of tax complexity

Abstract

This study examines the capital gains tax compliance behaviour in Nigeria. The study assesses certain elements of tax which explains how the compliance behaviour could be influenced to give the expected outcomes with the moderating effect of tax complexity. Survey questionnaire was designed to collate data from 181 respondents cutting across two states in Nigeria namely Bauchi and Gombe states. Thus, the data was collated to test five hypotheses of the study formulated to guide the conduct of the study. Multiple regression analysis and hierarchical regression analysis were conducted to test the direct and the indirect relationship. The findings of the study revealed that, tax knowledge, tax penalty and tax audit exhibited positive and significant relationship with capital gains tax compliance behaviour. However, tax incentives show positive but insignificant relationship with capital gains tax compliance behaviour. The hierarchical regression show that tax complexity moderates the relationship between tax penalty and compliance behaviour. It is established from the findings that; tax complexity does not moderate the relationship between other three tax elements and compliance behaviour. Specifically, the major implication of this study is that, the tax elements have positive influence on the compliance behaviour and that, tax complexity moderates the relationship between tax penalty and compliance behaviour. The study recommends that, awareness and advocacy effort as well as tightening bolts on the taxpayers should be pursued vigorously to address the
problems of tax evasion and avoidance. The limitation of this study is that, only capital gains tax is considered. Future research effort should concentrate on other classes of tax to ensure that robust outcomes are empirically established.