ADMINISTRATIVE PENALTIES AS MODERATOR BETWEEN TAX AUDIT AND TAX COMPLIANCE: INSIGHTS FROM TAX PRACTITIONERS IN NORTHEAST NIGERIA

Abstract

This study investigates how tax practitioners in Northeast Nigeria perceive administrative penalties as moderating the relationship between tax audits and tax compliance. Survey data were collected from a sample of 104 tax practitioners from six Government Business Tax Offices (GBTOs) and seven Micro and Small Tax Offices (MSTOs) in the region. Descriptive data were analysed using JASP, while hypotheses were tested using PLS-SEM in SmartPLS. The results show that administrative penalties have a significant positive impact on tax compliance (β = 0.561, SD = 0.086, t = 6.498, p < 0.001). However, none of the tax audit types (back duty audit, desk audit, field audit, and registration audit) have a significant impact on tax compliance. Surprisingly, the interaction between back duty audit and administrative penalties has a significant negative impact on tax compliance (β = -0.464, SD = 0.214, t = 2.172, p = 0.030). The study’s findings suggest to tax authorities that administrative penalties jointly with back duty audit may be an effective strategy to improve tax compliance, but their use in conjunction with back duty audits may require careful consideration. The study contributes to the existing literature on tax compliance and provides insights into the specific context of Northeast Nigeria