The Objectives of Taxation and Challenges of Effective Company Taxation in Nigeria: A Legal and Economic Appraisal

Abstract

Taxation is universally acknowledged as a cornerstone of statecraft, serving as both a fiscal tool for revenue generation and a mechanism for achieving broader socio-economic objectives. Traditionally, the primary objective of taxation was to mobilise sufficient revenue to fund government expenditure and provide public goods. However, in contemporary economies, taxation has evolved into a multifaceted instrument, addressing diverse goals such as income redistribution, economic stabilisation, environmental sustainability, and promotion of social 
equity. This paper examines both the traditional and contemporary objectives of taxation while interrogating the challenges to effective company taxation in Nigeria. Drawing from legal, economic, and institutional perspectives, the paper analyses how taxation functions as a catalyst for growth and development through provisions of merit and public goods, wealth redistribution, economic management, and the regulation of harmful practices. The study also highlights the Nigerian experience, where ineffective administration, outdated legislative 
provisions, judicial conservatism in statutory interpretation, and operational lapses of tax administrators have undermined the attainment of these objectives. Special attention is given to the need for purposive judicial interpretation of tax statutes, reforms in legislative drafting, and institutional strengthening of tax authorities to curb evasion and avoidance. The paper argues that aligning Nigeria’s taxation system with global best practices requires synergy among the legislature, judiciary, executive, and corporate entities. It concludes that taxation 
in Nigeria must transcend revenue mobilisation, embracing its modern roles in governance, equity, and economic development, while adopting innovative reforms to address persistent legal and operational challenges.