An Evaluation of Tax Avoidance Strategies in Nigerian Oil Companies: A Case Study of Shell Nigeria
- Project Research
- 1-5 Chapters
- Abstract : Available
- Table of Content: Available
- Reference Style:
- Recommended for :
- NGN 5000
Background of the Study
Tax avoidance involves legally exploiting loopholes in tax laws to minimize tax liabilities. While it is not illegal, the practice often raises ethical concerns, particularly when large corporations use aggressive strategies that deprive governments of significant revenue. In Nigeria, the oil and gas sector is a critical source of government revenue, and multinational corporations like Shell Nigeria are known for employing sophisticated tax avoidance mechanisms (Onyeka & Udo, 2023).
The Nigerian government has implemented various measures to curb aggressive tax avoidance, such as transfer pricing regulations and the establishment of the Federal Inland Revenue Service (FIRS). However, these efforts are often hindered by legal complexities, inadequate enforcement, and limited expertise in international taxation (Okonkwo & Adeoye, 2024). This study evaluates the tax avoidance strategies used by Shell Nigeria, examining their implications for government revenue and policy reforms.
Statement of the Problem
Tax avoidance by oil companies in Nigeria has significant implications for revenue mobilization and economic sustainability. Shell Nigeria, as one of the leading players in the industry, has faced criticism for its tax practices, which include profit shifting and the use of tax havens. These strategies, while technically legal, result in substantial revenue losses for the government, affecting its ability to fund public services and infrastructure (Chukwuma & Obinna, 2023).
This study examines the tax avoidance strategies employed by Shell Nigeria, assessing their impact on revenue generation and recommending measures to address these practices.
Objectives of the Study
- To identify the tax avoidance strategies used by Shell Nigeria.
- To evaluate the impact of these strategies on government revenue.
- To propose policy recommendations for addressing aggressive tax avoidance in the oil sector.
Research Questions
- What tax avoidance strategies are used by Shell Nigeria?
- How do these strategies impact government revenue in Nigeria?
- What policy reforms can address aggressive tax avoidance in the oil sector?
Research Hypotheses
- Tax avoidance strategies significantly reduce government revenue in Nigeria.
- Aggressive tax avoidance practices by Shell Nigeria negatively impact the Nigerian economy.
- Policy reforms targeting tax avoidance significantly enhance revenue collection in the oil sector.
Scope and Limitations of the Study
The study focuses on Shell Nigeria and its tax practices from 2023 to 2025. Limitations include restricted access to proprietary financial data and challenges in generalizing findings to other oil companies.
Definitions of Terms
- Tax Avoidance: The legal use of tax laws to minimize tax liabilities.
- Shell Nigeria: A subsidiary of Shell Plc, involved in oil exploration and production in Nigeria.
- Oil Sector: The industry focused on the extraction, refining, and sale of petroleum products.
