To What Extent Can Tax Evasion And Tax Avoidance Become Criminal Liability


Taxes, and tax systems, are fundamental components of the economic growth and government revenue of a country. Brautigam (2008) opined that taxes underwrite the capacity of states to carry out their goals; they form ne the central arenas for the conduct of state-society relations, and they shape the balance between accumulation and redistribution that gives states their social character. Thus, taxes build capacity to provide security, meet basic needs or foster economic development and they build legitimacy and consent to help to create a consensual, accountable and representative government. A key component of any tax system is how it is administered.
In the same vein, Naiyeju, (2010). Bahi and Bird (2008) robbed minds that no tax is better than its administration, so as administration matters a lot, and an essential objective of tax ministration is o ensure the maximum possible compliance by taxpayers of all types with their action obligations. Unfortunately, in any country administrations are usually weak and characterized by extensive evasion, corruption and coercion. In many cases overall tax levels are low, and large sectors of the informal economy escape the tax net entirely (Brautigani, Fjelftand and Moore, 2008).

Nevertheless, taxation has been identified as an alternative to oil revenue and a more reliable source of revenue (McKerchar, 2003). A nation’s tax system is often a reflection of its communal values and the values of those in power (Ross, 2007). Thus, to create a system of taxation, a nation must make choices regarding the distribution of burden and how the taxes collected will be spent.


THE OXFORD ENGLISH DICTIONARY defines a tax as “a compulsory contribution to the support of government levied on persons, property, income, commodities, transactions etc. now at a fixed rate mostly proportionate to the amount on which the contribution is levied. On the same hand, THE INTERNATIONAL WEBSTER’S COMPREHENSIVE DICTIONARY OF THE ENGLISH LANGUAGE sees tax as” a compulsory contribution levied upon person, property or business for the support of government; by extension, any proportionate assessment, as on the members of society.
So, the areas of taxes and tax system are indomitably important in the economic development of every society and it’s the only way by which such economy is enhanced. The poor concentration in the tax and tax system is drastically devoid of the growth of the economy of society.

Crime on the other hand is a public wrong. It is an act strongly disapproved by society. Crime includes murder, dacoities, fraud, rape, etc. Each society has its perspective of defining crime. In confining ourselves to this article it can be said, the crime involves both commissions and omissions. According to section 2 of CRIMINAL CODE 1990, the law of Southern Nigeria defines crime as an act or omission which renders a person that doing the act or making the omission liable to punishment under this code or under any Act or Law, is called an offence. Sir WILLIAMS BLACKSTONE opined on the meaning of crime, as an ” Act omitted or committed in violation of public law forbidden or commanding it, it is a violation of public rights and duties due to the whole community.

The term tax avoidance refers to the use of legal methods ways, technics to minimize and reduce the amount of income tax owed by an individual or a business or a company that is not a novelty to the law. This is generally accomplished by claiming as many deductions and credits as are allowable. It may also be achieved by prioritizing investments that have tax advantages, such as buying tax-free municipal bonds. Tax avoidance is not the same as tax evasion. It should be borne in mind that, ordinarily tax avoidance can not become a crime whatsoever once public revenues can not be cheated, criminal charges can not be instituted.

PROF. M.T Abdur Razaq, in REVENUE LAW AND PRACTICE IN NIGERIA, 3rd edition, pg 16 &17. He opined that it may be assumed that if the scheme is successful at the technical tax level, there can be no criminal offence, the public revenue can not be cheated Li has no lost tax. It means that once there are no shams in the avoidance of any individual or company, firm, there can be no criminal charge. However, over-confidence about an avoidance scheme can become an evasion and lead to a prison sentence.


The evasion on its own relies on illegal methods such as underreporting income and falsifying deductions, see the case of Gazprom Oil & Gas Ltd. V FIRS (TAT/ABJ/APP/030/2014), where the Tribunal command the petitioner to fulfil its duty to the FIRS, after a prior evasion of the tax. It was held in the case of R v ALLEN (1999) STC 846 that evasion may even result from taking a position on tax legislation, which is later known to be incorrect.

In the comments of BRIGHTMAN J. in ROOME v EDWARDS (1979) STC 546, 561-5 and also comments of TEMPLEMAN I.J. in IRC v. SKYPE INVESTMENT Ltd. (1982) STC 625 the yardstick was crafted between Tax Avoidance and evasion thus: there is an important distinction between a scheme under which no liability to tax arises, (tax avoidance) and under which a charge arises but the tax can not be collected. The latter may be evasion and subject to penalty.

In this regard, the question to be posed is whether tax evasion and tax avoidance can be become, cheating the public revenues and be charged under Penal or Criminal codes or Economic and Financial crimes Commission Act. The question is affirmatively positive, going by the above-cited authorities and juristic views. By the provision of section 421 of Criminal code;
Any person who uses any fraudulent trick or device obtains from any other person anything capable of being stolen, or induces any other person to deliver to any person anything capable of being stolen or to pay or deliver to any person any money or goods, or any greater sum of money or greater quantity of goods than he would have paid or delivered but for such trick Ir device, is guilty …, and is liable to imprisonment for two years.

It is my humble opinion, that the tax evasion or tax avoidance can not be charged and liable under this provision unless the taxpayer pays the low amount than expected of the home he can be charged within the ambit of the section. The question as to whether evasion and avoidance of tax can be charged under the Economic and Financial Crimes Commission Act is a question of fact, depending on the facts and circumstances of each case.

However, the provision of section 320 of Penal Code provides thus: whoever by deceiving any per–
(A) Fraudulently or dishonestly induces the person so deceived to deliver any property to any person or consent that any person shall retain any property; or
(B) Intentionally induces the person so deceived to do or omit to do anything which he would not do or omit to do if he were not so deceived and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat. S.S RICHARDSON said dishonest concealment of fact is a deception within the meaning of this section.

It follows, therefore, that a taxpayer, whether company, firm, individual business, transaction etc. Omit dishonestly or fraudulently to remit its tax to the FIRS or State Inland Revenue Service or the body due to, within the jurisdiction of Northern Nigeria can be charged and prosecuted within the ambit of the sub (b) of this section. However, it depends on the facts and circumstances of each case.

Finally, tax avoidance by any company, business parasites, firm, small trade, individual, etc. Can not be ordinarily liable under the criminal unless and until it becomes cheating to the Revenue Service board. However, in any form tax evasion always become a criminal liability as there is total cheating there as can be liable both the Criminal and Penal codes respectively. And Economic and Financial Crimes Commission Act.

For the foregoing, therefore, it is my humble submission, that tax evasion has been a crime against public revenue all over the world, and avoidance of tax is a legitimate means of reduction and decrease of tax by the taxpayers the former can be liable under the above-mentioned Acts as circumstances warrant it or under the Act prescribing such tax.




Jamiu Lukman Akanbi is a prolific writer, a researcher and an immediate student of Usman Danfodiyo University, Sokoto.
He can be reached through:
08146965956 or 09011669144
[email protected]

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