EXAMINATION OF THE RELEVANCE OF RESIDENCY IN ASSESSMENT OF TAX LIABILITY IN NIGERIA

Abstract

Tax is a compulsory financial charge or some other type of levy imposed on a taxpayer both individuals and legal entity by a governmental organization in order to fund government spending and various public expenditures. In taxation, residence of an individual plays an important role in the determination of the tax authority to which the individual would be liable to pay his tax. This research examined the relevance of residency in assessment of tax liability under the Personal Income Tax Act to ascertain how residency is determined for purpose of tax assessment under the Personal Income Tax Act vis a vis the challenges in determination of residency for the purpose of tax liability in Nigeria. The objective of this Act is to provide uniform procedures for efficient administration of tax laws in order to facilitate tax compliance by taxpayers and optimize tax revenue to meet international best practices. The research methodology adopted for the development of this research is the doctrinal method of legal research using the library-based approach. It consisted of the primary and secondary materials. The primary materials are: statutes, and judicial precedents, the secondary materials are: information on the internet, books, articles etc. It was found that that the Personal Income Tax Act indicated how residency for the purpose of assessment and collection of Personal Income Tax can be determined. Similarly, it was also found that residency for purpose of tax collection is determined by the principal residence of the taxpayer or where the principal office is situated in the case of companies. Nigeria Tax Administration Act, 2025 dealt with determination of residence for assessment of tax liability in Nigeria. The research therefore concludes that understanding one's residency status and its implications is essential for accurate tax reporting and compliance with the tax laws in Nigeria and further recommend adequate implementation of the Nigeria Tax Administration Act, 2025.