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Effect of Electronic Tax Administration on Tax Revenue Generation in Nigeria

Abstract

Electronic tax administration has become a fundamental component of modern public financial management, transforming the processes of tax assessment, collection, filing, payment, monitoring, and enforcement through the application of digital technologies. The integration of electronic tax systems—including e-registration, e-filing, e-payment, e-Tax Clearance Certificates (e-TCC), electronic taxpayer databases, automated tax audits, and digital tax administration platforms—has significantly improved the efficiency, transparency, and effectiveness of tax administration in many countries. Governments increasingly rely on electronic tax administration to expand the tax base, reduce tax evasion, improve taxpayer compliance, minimize administrative costs, and enhance revenue mobilization. In Nigeria, the Federal Inland Revenue Service (FIRS) and State Internal Revenue Services (SIRS) have implemented various electronic tax administration initiatives as part of broader fiscal reforms aimed at modernizing the tax system and increasing non-oil revenue generation. These initiatives have been supported by advances in information and communication technology (ICT), the introduction of TaxPro Max, electronic payment platforms, taxpayer identification systems, and digital tax monitoring mechanisms. Despite these reforms, Nigeria continues to experience challenges relating to low tax compliance, tax evasion, inadequate taxpayer records, informal economic activities, weak digital infrastructure, limited taxpayer awareness, and administrative inefficiencies that constrain revenue generation. While electronic tax administration is expected to improve the efficiency of tax collection by reducing human intervention, increasing transparency, and strengthening compliance monitoring, concerns remain regarding cybersecurity threats, internet accessibility, technological readiness, and the capacity of tax authorities and taxpayers to effectively utilize digital tax systems. Although previous studies have examined digital taxation and tax compliance, empirical evidence regarding the effect of electronic tax administration on tax revenue generation in Nigeria remains limited and inconclusive. Against this background, this study investigates the effect of electronic tax administration on tax revenue generation in Nigeria. The study is anchored on the Technology Acceptance Model (TAM), the Theory of Planned Behaviour (TPB), and the Fiscal Exchange Theory. The Technology Acceptance Model explains that the successful implementation of electronic tax administration depends on users' perceptions of its usefulness and ease of use in improving tax administration processes. The Theory of Planned Behaviour posits that taxpayers' attitudes, subjective norms, and perceived behavioural control influence their willingness to adopt electronic tax systems and comply with tax obligations. Fiscal Exchange Theory argues that taxpayers are more likely to comply with tax laws when tax administration is transparent, efficient, and accountable, and when public revenues are effectively utilized for the provision of public goods and services. Collectively, these theoretical perspectives provide a comprehensive framework for explaining the relationship between electronic tax administration and tax revenue generation in Nigeria. The study adopts an ex post facto research design utilizing secondary data obtained from annual reports and statistical publications of the Federal Inland Revenue Service (FIRS), relevant State Internal Revenue Services (SIRS), the Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), the Federal Ministry of Finance, Budget and National Planning, and other relevant government agencies. A longitudinal time-series research approach covering a ten-year period will be employed to examine the relationship between electronic tax administration and tax revenue generation over time. Electronic tax administration will be measured using indicators such as electronic tax filing (e-filing), electronic tax payment (e-payment), electronic taxpayer registration, TaxPro Max adoption, digital tax audit systems, and electronic tax compliance platforms, while tax revenue generation will be measured using Companies Income Tax (CIT), Value Added Tax (VAT), Petroleum Profits Tax (PPT), Tertiary Education Tax (TET), Stamp Duties, Capital Gains Tax (CGT), and total federally collected tax revenue. Data analysis will involve descriptive statistics to summarize the characteristics of the study variables, correlation analysis to determine the degree of association among variables, and multiple regression and time-series econometric techniques to estimate the effect of electronic tax administration on tax revenue generation. Diagnostic tests including multicollinearity, heteroskedasticity, autocorrelation, stationarity, normality, cointegration, and model specification tests will be conducted to ensure the validity, consistency, reliability, and robustness of the empirical findings. The study anticipates that electronic tax administration will have a significant positive effect on tax revenue generation in Nigeria. The adoption of digital tax administration systems is expected to improve taxpayer registration, facilitate timely tax filing and payment, strengthen tax monitoring, reduce tax evasion, minimize administrative bottlenecks, and enhance the efficiency of tax collection processes. Electronic tax administration is also anticipated to improve the accuracy of taxpayer records, strengthen audit capabilities, reduce revenue leakages, promote transparency, and facilitate real-time monitoring of tax transactions. Furthermore, digital tax platforms are expected to reduce compliance costs for taxpayers, improve communication between tax authorities and taxpayers, enhance voluntary tax compliance, and increase government revenue through broader tax coverage and more efficient enforcement mechanisms. Conversely, inadequate digital infrastructure, limited taxpayer awareness, cybersecurity challenges, poor internet connectivity, and resistance to technological adoption may reduce the effectiveness of electronic tax administration and limit its contribution to revenue generation. Consequently, effective implementation of electronic tax administration is expected to strengthen Nigeria's tax system, improve fiscal sustainability, reduce dependence on oil revenue, and enhance the government's capacity to finance economic development and public service delivery. This study is expected to make significant theoretical and empirical contributions to the literature on taxation, public finance, accounting information systems, and digital governance by providing robust evidence on the relationship between electronic tax administration and tax revenue generation in Nigeria. Unlike previous studies that focused primarily on electronic tax filing or taxpayer compliance, this research provides a comprehensive evaluation of electronic tax administration as an integrated digital tax management system influencing government revenue generation. The findings will provide valuable insights for the Federal Inland Revenue Service (FIRS), State Internal Revenue Services (SIRS), the Federal Ministry of Finance, Budget and National Planning, the Central Bank of Nigeria (CBN), policymakers, tax practitioners, professional accounting bodies, software developers, international development partners, and academic researchers regarding the strategic importance of digital tax administration in strengthening revenue mobilization and fiscal sustainability. The study will also provide evidence-based recommendations for enhancing electronic tax infrastructure, improving taxpayer education, strengthening cybersecurity measures, promoting digital tax compliance, expanding electronic tax services, and fostering sustainable domestic revenue generation in Nigeria.

Keywords: Electronic tax administration, tax revenue generation, e-filing, e-payment, TaxPro Max, digital taxation, Federal Inland Revenue Service (FIRS), public finance, time-series analysis, Nigeria.