Taxation is considered a veritable source of revenue for financing developmental as well as people oriented programs in virtually all countries, irrespective of whether they are classified as developed or developing economies. History has however shown that individuals often exhibit one form of tax reduction behavior or the other, with series of arguments on the legal, economic and moral consequences of these acts.

Tax evasion and tax avoidance reduce government revenues. This has a significant detrimental effect on the provision of infrastructures, public services and public utilities. Multinational companies (MNCs) in the oil, gas, and manufacturing sectors have used various tax schemes, ranging from off-shore intermediary companies to claiming recharges, royalties or technical fees and under-reporting of profit, to avoid paying tax in Nigeria.

Stimulated majorly by increased profitability, and intense competition and pressure to increase earnings, capitalist enterprises constantly seek new ways of boosting their earnings by developing complex structures and novel ways of increasing their profits by exploiting ambiguities in the law. The evidence shows that tax havens and offshore financial centres, shaped by globalisation, are major structures facilitating the anti-social tax practices of MNCs.

Tax evasion is an unlawful practice which has the effect of reducing the government revenues needed for the provision of infrastructures, and for public services and public utilities. Tax avoidance, while not regarded by some as being unlawful, has the same effect. Both practices are motivated by different factors and involve a wide range of different mechanisms (Mo, 2003). They are amajor feature of national and international fiscal policy and of the global capitalist economy.

These tax practices are not the prerogative of developed economies, but are also encountered in developing countries; and huge sums of money are lost to government coffers by such practices, Unlike tax evasion, tax avoidance is considered by some scholars to be a lawful activity. However, despite disagreement about whether tax avoidance is an unlawful activity, both practices have negative consequences and effects (Cobham, 2005; Kirchler et al., 2003) and have, similar impacts on fiscal revenues,  Through tax havens and offshore financial centres it has been estimated that $1 trillion a year of ‘dirty’ money flows into the global banking system, one half of which comes from developing countries and transition economies.

Although public opinion perceives that localised corruption in developing countries is the key cause of global poverty, sixty tax havens and the banking sectors of London and New York have much more to account for. While the World Bank estimates that corruption by government officials costs developing countries a significant US$30 billion a year – this is only 3% of the US$900 billion of public funds lost through tax evasion schemes and other illicit practices by multinational companies.

Financial crimes such as tax evasion carried out by individuals and their Multinational companies, politically-exposed foreign elites’ collaborators are made possible and continue to be sustained by the unethical practices by the professionals, particularly accountants and auditors (local and foreign) (see the case of Osakwe, 2002). Despite the various statutory provisions, the tax legislations and policies, companies’ and professional bodies’ Acts in place in Nigeria, it is the members of the veteran Institute of Chartered Accountants of Nigeria (ICAN), in particular, who connived with Multinational companies and other foreign capitalists in siphoning the collective wealth of Nigeria into their foreign private accounts, and other their foreign collaborators [Dafinone, 2005; Aloba, 2002].

Despite the evidence, the consequent poverty all over Nigeria and the continued reluctance of these MNCs to cooperate with the regulators in Nigeria, little have been done by the authorities in the developed home countries of the MNCs and other foreign capitalist, to curb the act of tax evasion and avoidance and other trans-organised financial crimes atrocities being constantly perpetrated or sometimes collaborated by these multinational companies and some other foreign capitalist elite operating in Nigeria.

The relationship between tax evasion/avoidance and the multinational companies in developing countries can be situated in a contradictory role of capital accumulation ambition for the multinational companies and defence of capitalism for the developed capitalist countries (see Hoogvelt and Tinker, 1978]. It is the above capitalistic ambition of the Western economic powers, their multinational corporations (MNCs) and other foreign capitalists of reproducing capitalist relations at home that brought about the contradictory alignment between the corrupt local ruling elite in developing countries and the “good governance”, “accountability” and “transparency”-preaching Western capitalist world.

Thus, the corrupt activities of multinational companies and their accountants and the professional bodies, particularly accountants have got devastating effects on the socio-economic, political and cultural development of most developing countries.


Tax evasion and tax avoidance are considered by most governments to be serious threats to the integrity of tax systems in a democratic society. According to Spicer (1975), tax evasion and tax avoidance result in a loss of tax revenues, impair the chances of realizing the distributional or equity goal of taxation, and, if they become widespread, as they have in recent times, then more taxpayers may lose faith in the tax administration system and may be tempted to join the ranks of tax evaders.


While Companies and wealthy individuals use a range of tax evasion and tax avoidance schemes, tax havens, shell companies and inter-group structures to avoid and evade taxes in order to boost profits and capital , These schemes result in a loss of tax revenues which undermines government legitimacy and prevents economic and social development.

However, corporations regard tax avoidance schemes as justifiable and legitimate cost reduction programmes and not as practices which undermine social solidarity and the development of a just and fair society (Sikka, 2008a). In the last few years or so, the effects of such tax schemes on the world’s poor have been considered by various bodies, including charities and Tax Justice Network 2007); and there have been calls for reform to prohibit Multinational companies and the wealthy from using such schemes.


 Despite the emphasis on the importance of taxation and the efforts made at improving its efficiency, citizens’ aversion to taxes have remained a problem that most tax authorities have to grapple with. This is because individuals will always look for a means –legal or otherwise–to reduce or even completely avoid paying taxes. This result in heavy revenue losses to governments and ultimately affects their ability to meet their obligations. This phenomenon is acclaimed to be a global one, but it is generally acknowledged to be higher among the less developed/developing countries of the world. In the United States of America for example, the IRS reported that the total amount of federal taxes that were either not paid voluntarily or on time were estimated at between $312bn and $353bn in the year 2002 (Alabede, Ariffin and Idris, 2012). While Cobham (2005) estimates that developing countries lose USD 285 billion per year due to tax evasion in the domestic shadow economy. It is also reported that half of sub-Saharan African countries mobilize less than 17% of their GDP in tax revenues, which is below the 20% minimum level considered by the UN as necessary to achieve the MDGs (Supporting the development, 2010). These facts underscore the extent of losses suffered by nations when individuals do not pay their taxes, and thus justify the attention the subject of tax compliance has generated over the years.

While accountants and tax professionals are not expected to condone tax evasion by their clients, and are expected to promote transparency and accountability and devise techniques for detecting tax fraud, it has been shown that Some professionals do, in fact, use their expertise to facilitate both tax avoidance and tax evasion practices (Bakre, 2007; Ezeoha and Ogamba, 2010; Sikka ) Accounting technologies, such as transfer pricing and the use of intangible assets, also make it easier for Multinational companies to hide and shift capital (see Baker, 2005; Otusanya, 2010).

 Thus some professionals use accounting technologies and structures to make financial gains for their clients and themselves to the detriment of the public interest which they claim to be protecting (Bakre, 2007;)

It has been shown that tax revenues cannot be evaded or avoided without the involvement of accountants, lawyers and bankers (Ezeoha and Ogamba, 2010; Sikka, 2008a; US Senate Sub-Committee on Investigations, 2005; US Sub-Committee on Investigations, 2003, 2008).

Furthermore, Offshore tax havens which provide secrecy and low regulation, are key vehicles for the movement of ‘hot’ money (Christian Aid, 2005; Killian, 2006; Palan, 2002, 2003;Tax Justice Network, 2006).







Africa is losing more than $50bn (£33bn) every year in illicit financial outflows as governments and multinational companies engage in fraudulent schemes aimed at avoiding tax payments to some of the world’s poorest countries, impeding development projects and denying poor people access to crucial services.

The main objective of the study is to determine the major roles of multinational companies in tax evasion and tax avoidance in Nigeria.

Other specific objectives include:

  1. To establish the key actors key actors and facilitators of anti-social tax practices in Nigeria.
  2. To identify the problems created by MNCs and their affiliates operating in Nigeria through tax evasion and tax avoidance.
  3. Ascertain the effect of tax evasion/avoidance on Nigerian income generation.
  4. Determine the roles of professionals such as accountant in anti-social tax practices in Nigeria.
  5. Suggest possible recommendation and solution for reducing tax evasion/avoidance in Nigeria.


The research question provides a framework and guidelines through which substantial knowledge of the research study can be understood.

The research question asked includes:

  1. Who are the key actors key actors and facilitators of anti-social tax practices in Nigeria?
  2. What are the problems created by Multinational companies and their affiliates operating in Nigeria through tax evasion and tax avoidance?
  3. Are there any effects of tax evasion/avoidance on Nigerian income generation?
  4. Are professionals such as accountant involves in anti-social tax practices in Nigeria?
  5. What are the possible recommendation and solution for reducing tax evasion/avoidance in Nigeria?


“As the world economy sputters along in the wake of the global financial crisis, the illicit underworld is thriving - siphoning more and more money from developing countries each year.

Anonymous shell companies, tax haven secrecy, and trade-based money laundering techniques drained nearly a trillion dollars from the world’s poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth. While global momentum has been building over the past year to curtail this problem, more must be done.

This study should serve as a wake-up call to world leaders, foreign elites, government, management of foreign companies, politicians, tax officials, and tax authority, it will provide a positive insight on the roles and method through which multinational companies carried out illicit financial activity in order to increase profitability.

This research study, would contribute to the existing literature by focusing on tax reforms and administration of tax policy/laws in Nigeria with a view to identifying the critical problems that are confronting the tax system so that appropriate measures could be taken to tackle them.

This study shall set out, a comprehensive analysis of financial crime (tax evasion/avoidance) perpetrated by multinational companies and it will also consider the ‘dark’ side of professional practice by examining the involvement of professional accountants in facilitating tax avoidance, tax evasion and corruption in Nigeria.

 This study shall reviews related literature on the subject matter with tax compliance with particular attention on the dimensions of evasion and avoidance as forms of non-compliance. Attention is also paid to the discussions and arguments relating to the distinction between the two concepts as they affect tax revenue.


Finally this study will be of great significance to schools and students, it will serve as a reference point for future researchers who will want to research more on the topic.


Hypothesis One

Hi: there’s no significant relationship between tax avoidance, tax evasion and company income generation in Nigeria

Hypothesis Two

Hi: there is no significant relationship between the tax rates and tax avoidance and tax evasion.


From the foregoing discussion, the research focuses on roles of multinational companies in tax evasion and tax avoidance in Nigeria, using the staffs of federal Inland Revenue Service.


  1. Financial challenges:this factors serves as a deficiency for the research work, and as a result of low financial capability, it was not enough to give us desired results.
  2. Inadequate source of data: the researcher was faced with inability to generate enough required materials, and relevant data for the research work.
  3. Time constraint: this pose a great challenges to the research work, due to the time frame given.


  1. Taxation: is defined by Ogundele (1999) as the process or machinery by which individuals, groups, or communities are made to contribute in some agreed quantum and method for the purposes of the administration and general development of the society they belong.
  2. Tax evasion: refers to any intentional, illegal reduction of tax payments, which usually takes the form of underreporting income, sales or wealth, or overstating deductions (Schneider, Braithwaite & Reinhart 2001), including failure to file appropriate tax returns.
  3. Tax Avoidance: refers to the reduction in tax burden by means of practices that take full advantage of the tax code or exploiting the loopholes in the tax laws to reduce tax liabilities by arranging ones tax affairs using tax shelters in the tax law, and avoiding the tax traps in the tax laws.
  4. Anti-social practices involve behaviour which confers improper benefits contrary to the legal and moral norms of society and which undermine the capacity of the authorities to secure the welfare of all citizens.
  5. Offshore tax havens are regions which are relatively small geographically, and which offer shelter to international capital through bank secrecy, confidentiality, little (or no) regulation, and low (or no) tax (Palan, 2003).
  6. Non-Compliance: can be defined as the failure on the part of a taxpayer to correctly file returns, report actual income, claim the correct deductions, reliefs and rebates and remit the actual amount of tax payable to the authority on time.
  7. Accountant:            An accountant is any person who possesses a professional license to practice accountancy from a recognized professional body and has legal capacity and authority to carryout the duties of accountants in taxation and audit practice.
  8. Tax:  is a compulsory levy payable by individual economic units or corporate bodies to government without any direct quid pro quo from the government.
  9. Multinational Companies: These are companies owned by foreign investors or individual operating outside their country of origin .i.e. financial operation are carried out in a developing countries.

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