Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between presumptive tax assessment and tax compliance level has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of the Nigerian Oil and Gas Sector where operating conditions differ markedly from more developed markets.

the Nigerian Oil and Gas Sector presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

Despite a growing body of literature on presumptive tax assessment, there remains limited consensus on the precise nature of its relationship with tax compliance level, particularly within the Nigerian Oil and Gas Sector. Many organizations continue to make decisions about presumptive tax assessment without a clear, evidence-based understanding of how those decisions ultimately affect tax compliance level. This gap between practice and empirical understanding is the central problem this study seeks to address.

1.3 Objectives of the Study

1. To examine the effect of Presumptive Tax Assessment on tax compliance level in the Nigerian Oil and Gas Sector.
2. To assess the extent to which presumptive tax assessment influences tax compliance level within the study area.
3. To identify the challenges associated with presumptive tax assessment in relation to tax compliance level.
4. To recommend strategies for optimizing presumptive tax assessment in order to improve tax compliance level.

1.4 Research Questions

1. What is the effect of presumptive tax assessment on tax compliance level in the Nigerian Oil and Gas Sector?
2. To what extent does presumptive tax assessment influence tax compliance level within the study area?
3. What challenges are associated with presumptive tax assessment in relation to tax compliance level?
4. What strategies can be adopted to optimize presumptive tax assessment in order to improve tax compliance level?

1.5 Significance of the Study

Beyond its academic contribution to the field of taxation, this study has practical value for management teams within the Nigerian Oil and Gas Sector seeking to understand how presumptive tax assessment translates into measurable outcomes around tax compliance level. It is equally useful to students and future researchers looking for a localized empirical reference on this relationship.

1.6 Scope of the Study

In terms of scope, this study confines itself to the Nigerian Oil and Gas Sector, focusing specifically on how presumptive tax assessment relates to tax compliance level within that setting. Findings are interpreted within these boundaries rather than as universal claims applicable to every organization or market.