A Conceptual Review of the Challenges of Effective Tax Collection from the Informal Sector in Kano, Nigeria

  • Usman Sani Kofar Wambai Tunku Puteri Intan Safinaz School of Accountancy, College of Business Universiti Utara Malaysia, Sintok, Kedah, Malaysia
  • Chek Derashid Tunku Puteri Intan Safinaz School of Accountancy, College of Business Universiti Utara Malaysia, Sintok, Kedah, Malaysia
  • Idawati Ibrahim Tunku Puteri Intan Safinaz School of Accountancy, College of Business Universiti Utara Malaysia, Sintok, Kedah, Malaysia

Abstract

The informal sector is often referred to as unregulated financial undertakings and poses a serious challenge to government in relation to tax revenue collection. The main issue of concern is why a wide gap exists between the actual tax collections from the informal sector and the potential tax that should be collected. Thus, the main aim of this study is to identify and examine some of the challenges militating against effective tax collection from the informal sector in Kano State, Nigeria. The paper is literature based, as such, it critically examines current literature on tax collection. It was discovered that issues such as reliance on cash based transactions, absence of required records and weak tax laws are some of the challenges preventing effective tax collection from the informal sector. It is therefore recommended that tax collection from the informal sector could be enhanced when government educates the informal operators, strengthens tax laws, emphasize on adequate records keeping and simplify the formalization procedures.

Published
2020-05-19
How to Cite
KOFAR WAMBAI, Usman Sani; DERASHID, Chek; IBRAHIM, Idawati. A Conceptual Review of the Challenges of Effective Tax Collection from the Informal Sector in Kano, Nigeria. Journal of Business Management and Accounting, [S.l.], v. 9, n. 1, p. 1-13, may 2020. ISSN 2636-9249. Available at: <http://e-journal.uum.edu.my/index.php/jbma/article/view/8737>. Date accessed: 13 aug. 2020. doi: https://doi.org/10.32890/jbma2019.9.1.8737.
Section
Articles