Taxation and the Performance of Small and Medium Enterprises in Nigeria
Keywords:
Taxation
Abstract
This study critically investigated the relationship between taxation and the performance of small and medium enterprises in Lagos State, Nigeria. Specifically, the study investigated the relationship of tax policy and effectiveness of SMEs in Nigeria; investigated the impact of tax administration on profitability of SMEs in Nigeria; examined the effect of multiple taxation on productivity of SMEs in Nigeria; determined the effect of tax incentives on efficiency of SMEs in Nigeria. Survey research design was employed and the sample of three hundred and ninety-six (396) SMEs operators determined using Taro Yamane (1067) was drawn from fourty-two thousand and sixty-seven (42,067). Data were gathered through self-administered questionnaire and the hypotheses were tested using Correlation and Analysis of Variance with the Aids of SPSS (Statistical Package for Social Sciences). The findings revealed that tax policy has significant relationship with the effectiveness of SMEs. But tax administration was revealed to have had no significant impact on profitability of SMEs. It was furthered revealed that multiple tax has significant effect on the productivity of SMEs, and that tax incentives have significant effect on the efficiency of SMEs. Thus the study concluded that tax policy and multiple tax as well as tax incentives were capable of improving performance of Small and Medium Scale Enterprises in Nigeria. But tax administration seemed to have poor effect on the SMEs performance. It was therefore recommended that Governments should design targeted tax policies that will actively encourage investments in SMEs in Nigeria, and to create a tax friendly environment through wide publicity / sensitization exercise
References
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Ocheni, S. I. (2015). Impact analysis of tax policy and the Performance of Small and Medium Scale Enterprises in Nigerian Economy, Strategic Management Quarterly. 3(1),71-94, https://doi.org/10.15640/smq.v3n1a3
Odebode, O. O., Salisu, O. O., Shokunbi, M. O. & Oladayo-Ibrahim, S. I. (2019). Tax Policy and the SMEs: An Empirical Analysis of Perception, Compliance and Growth in Lagos State. Education & Science Journal of Policy Review and Curriculum Development. 9(2);111-122
Ojochogwu Winnie Atawodi & Stephen Aanu Ojeka (2012). Factors That Affect Tax Compliance among Small and Medium Enterprises (SMEs) in North Central Nigeria. International Journal of Business and Management. 7(12)
Olorunshola, J.A. (2003). Problems and Prospects of SMEs in Nigeria. Paper Presented at CBN Seminar on Small and Medium Industries Equity Investment Scheme (SMIEIS). www.cenbank.orglout!publications/guidelines/ dfd/2004/smieris.pdf
Philips O. A. (1969), The Significance of Nigerian’s Income tax relief Incentives, The Nigerian Journals, of economic and Social studies, 11(2), 1-11.
Randeree, K., Mahal, A., & Narwani, A. (2012). A business continuity management maturity model for the UAE banking sector. Business Process Management Journal, 18(3), 472–492. doi:10.1108/14637151211232650
Sanusi, J. O. (2003). Overview of government’s efforts in the developments of SMEs and the emergence of Small and Medium Industries Equity Investment Scheme (SMIEIS). Paper presented at the National Summit on SMIEIS Organised by the Bankers’ Committee and Lagos Chamber of Commerce and Industry (LCCI), Lagos. on 10th June, 2003.
Small and Medium Enterprises Development Agency of Nigeria (2013) https://www.smedan.gov.ng/images/PDF/2013-MSME-Survey-Summary-Report.pd
Smith, A (1776). Wealth of Nations, Canon’s edition, Bk, V, Ch. II, Part II. P. 777-778, 1776
Speight, P. (2011), “Business continuity”, Journal of Applied Security Research, 6(4), 529-554.
Srnatrakalev, C. (2006). “Tax Policy for SMEs”, Paper Delivered at 6th Global Conference on Business and Economics. Gutman Conference Center U.S.A.
Tabet, R. & Onyeukwu P. E., (2019) “Multiple Taxation and Small and Medium Scale Enterprises (SMEs) Financial Performance in Abuja, Nigeria,” World Journal of Innovative Research (WJIR), 6(2)
Tucker, E. (2015), Business continuity from preparedness to recovery. A standards based approach, Elsevier: Amsterdam.
Ufua, D. E., Olujobi, O. J., Ogbari, M. E., Dada, J. A. & Edafe, O. D. (2020). Operations of small and medium enterprises and the legal system in Nigeria. Humanities and Social Sciences Communications, 7(94), 1-7.
Yadviga, S., (1999) Taxation of Small and Medium Enterprises”, A thesis presented for the award a degree of MA in Economics, 1999
Adeusi, S. O., Alawiye, A. A. & Ibitoye, O. A. (2014). The impact of informal capital market on the development of small and medium scale enterprises in Nigeria. Development Economic: Regional and Country Studies E-journal, 1-37.
Agu, G. A., Onwuka, O. O., & Aruomah, O. (2019). Impact Of Taxation on the Performance of Small And Medium Enterprises In Aba, Abia State, Nigeria. Archives of Business Research, 7(SP), 1-15
Amewuda, A. & David, A. (2021). Empirical studies on the effects of taxation and the general barriers to Sme Development on SMEs. Finance & Management Engineering journal of Africa. Dama academic scholarly & scientific research society. 3(6):53-64
Aryeefey, E. & Ahene, A. (2004). Changing Regulatory Environment for Small Medium Size Enterprises and their Performance in Ghana. CRC Working
Baba, H., Watanabe, T., Nagaishi, M. and Matsumoto, H. (2014), “Area business continuity management, a new opportunity for building economic resilience”, Procedia Economic and Finance, Vol. 18, pp. 296-303.
Bjerga, T. and Aven, T. (2016), Some perspectives on risk management: A security case study from the oil and gas industry, in Proceedings of the Institution of Mechanical Engineers, Part O: Journal of Risk and Reliability, 1-14.
BSI Group (2015). ISO22301 for Business Continuity Management: Your implementation guide. London: BSI Group.
Cerullo, V. and Cerullo, M. J. (2004), “Business continuity planning: a comprehensive approach”, Information Systems Management, Vol. 21, No. 3, pp. 70-78.
Chu, H.M., Kara, 0. & Benzing, C. (2008). “An Empirical Study of Nigerian Entrepreneurs: Success, Motivations, Problems and Stress”. International Journal of Business Research, 8(2), 102-106.
Daniel T. & Faustin G. (2019) Effect of tax incentives on the growth of small and medium-sized enterprises (SMEs) in Rwanda: A case study of SMEs in Nyarugenge district. Journal of Accounting and Taxation. 11(5); 89-98.
Deloitte (2018). Nigeria's National Tax Policy Retrieved from https://www2.deloitte.com/ng /en/pages/tax/articles/inside-tax-articles/nigerias-national-tax-policy-any-agenda-for-the-new-firs-chair.html
Dickson E. Oriakhi & Presley K. Osemwengie (2013). Tax incentives and revenue productivity of the Nigerian Tax System. Published by European Centre for Research Training and Development, 1(1), 31-44
Dzomoda, O. (2022). Environmental sustainability commitment and access to finance by small and medium enterprises: The role of financial performance and corporate governance. Sustainability, 14, 1-20.
Elliott, D., Swartz, E., & Herbane, B. (2010a). Business Continuity Management – A Crisis Management Approach (2nd ed.). London: Routledge.
Evans, T, Lawrence, A. B. & Richard, T. O. (2016). The Effect of Tax Payment on the Performance of SMEs: The Case of Selected SMEs in Ghana. West Municipal Assembly. European Journal of Business and Management www.iiste.org 8(20), 119-125
Federal Ministry of Finance (FMF), National Tax Policy (2012), Retrieved 7/5/2017 from http://webcache.googleusercontent.com/search?q=cache:LC55WAlhuRIJ:9jalegal.com.Ng/downloads/Articles/Tax/Nationaltax%2520policy%2520document.pdf+&cd=2&hl=en&ct=clnk&gl=ng
Hanefah, M., Ariff, M. & Kasipfflai, J. (2002). Compliance Costs of Small and Medium Enterprises. Journal of Australian Taxation,
International Organisation for Standardization (2012). ISO 22301 Societal security –business continuity management systems–requirements, Switzerland: Geneva.
International Tax Dialogue (2007). “Taxation of SMEs”. Background Paper for the International Tax Dialogue Conference, Bueons Aires.
Lawal, B. A. & Ajayi-Owoeye, A. O. (2020). Tax incentives and financial performance of multinational firms in Nigeria. Tax and tax management compliance in Nigeria. OGE Business School Publisher, Lagos, Nigeria 232-252
Leyira C. M. & Chukwuma E. (2012). Tax System in Nigeria – Challenges and the Way Forward. Research Journal of Finance and Accounting. 3(5), 9-15.
Mahohoma, T. & Agbenyegah, A. T. (2020). A quantitative analysis of selected variables on the impact of small business growth in the Ethekwini Region of Durban in South Africa. Acta Universitatis Danubius, 16(6), 38-53.
National Bureau of Statistics(2013)https://www.nigerianstat.gov.ng/pdfuploads/Demographic%20Statistics%20Bulletin%202013.pdf
Njoku, P. O., (2009). Public Finance. Sources, Administration and Management” Enugu: El’demak Publishers, 2009.
Nnam, I. J., Amara, F. M., Ekete L. I., Okeke, S. E. and Chukwunwike O. D. (2022). Taxation Practices and the Survival of Small and Medium-Sized Enterprises (SMEs). Universal Journal of Accounting and Finance 10(2): 399-410
Nnubia, I. C. & Fabian C. O., (2018). Effect of tax incentives on economic growth in Nigeria. International Journal of Social Sciences and Conflict Management. 3(2); 142-160
Ocheni, S. I. (2015). Impact analysis of tax policy and the Performance of Small and Medium Scale Enterprises in Nigerian Economy, Strategic Management Quarterly. 3(1),71-94, https://doi.org/10.15640/smq.v3n1a3
Odebode, O. O., Salisu, O. O., Shokunbi, M. O. & Oladayo-Ibrahim, S. I. (2019). Tax Policy and the SMEs: An Empirical Analysis of Perception, Compliance and Growth in Lagos State. Education & Science Journal of Policy Review and Curriculum Development. 9(2);111-122
Ojochogwu Winnie Atawodi & Stephen Aanu Ojeka (2012). Factors That Affect Tax Compliance among Small and Medium Enterprises (SMEs) in North Central Nigeria. International Journal of Business and Management. 7(12)
Olorunshola, J.A. (2003). Problems and Prospects of SMEs in Nigeria. Paper Presented at CBN Seminar on Small and Medium Industries Equity Investment Scheme (SMIEIS). www.cenbank.orglout!publications/guidelines/ dfd/2004/smieris.pdf
Philips O. A. (1969), The Significance of Nigerian’s Income tax relief Incentives, The Nigerian Journals, of economic and Social studies, 11(2), 1-11.
Randeree, K., Mahal, A., & Narwani, A. (2012). A business continuity management maturity model for the UAE banking sector. Business Process Management Journal, 18(3), 472–492. doi:10.1108/14637151211232650
Sanusi, J. O. (2003). Overview of government’s efforts in the developments of SMEs and the emergence of Small and Medium Industries Equity Investment Scheme (SMIEIS). Paper presented at the National Summit on SMIEIS Organised by the Bankers’ Committee and Lagos Chamber of Commerce and Industry (LCCI), Lagos. on 10th June, 2003.
Small and Medium Enterprises Development Agency of Nigeria (2013) https://www.smedan.gov.ng/images/PDF/2013-MSME-Survey-Summary-Report.pd
Smith, A (1776). Wealth of Nations, Canon’s edition, Bk, V, Ch. II, Part II. P. 777-778, 1776
Speight, P. (2011), “Business continuity”, Journal of Applied Security Research, 6(4), 529-554.
Srnatrakalev, C. (2006). “Tax Policy for SMEs”, Paper Delivered at 6th Global Conference on Business and Economics. Gutman Conference Center U.S.A.
Tabet, R. & Onyeukwu P. E., (2019) “Multiple Taxation and Small and Medium Scale Enterprises (SMEs) Financial Performance in Abuja, Nigeria,” World Journal of Innovative Research (WJIR), 6(2)
Tucker, E. (2015), Business continuity from preparedness to recovery. A standards based approach, Elsevier: Amsterdam.
Ufua, D. E., Olujobi, O. J., Ogbari, M. E., Dada, J. A. & Edafe, O. D. (2020). Operations of small and medium enterprises and the legal system in Nigeria. Humanities and Social Sciences Communications, 7(94), 1-7.
Yadviga, S., (1999) Taxation of Small and Medium Enterprises”, A thesis presented for the award a degree of MA in Economics, 1999
Published
2024-11-01
How to Cite
Oloyede, A. M., Otusanya, O. J., & David, A.-P. (2024). Taxation and the Performance of Small and Medium Enterprises in Nigeria. Global Journal of Accounting, 10(1), 40-61. Retrieved from http://gja.unilag.edu.ng/article/view/2273
Section
Articles
