Impact of Tax Policies on the Performance of Micro Small Medium Enterprises (MSMEs) in Nigeria

Abstract

Government has always used tax as a tool to develop its economy and handle its businesses which is one of the reasons why tax is an important stream of revenue. However, the non-compliance of tax in Nigeria is high. In this research effort, some MSMEs in Kubwa, F.C.T Abuja were used to evaluate and rank the factors that encourage non-compliance with tax obligation by MSMEs. It was gathered that high tax rates and complex filing procedures are the most crucial factors causing non-compliance of MSMEs. Some other factors like multiple taxation and lack of proper enlightenment affect tax compliance among the MSMEs respondents of this project work only to a minimal level. Therefore, it is recommended that MSMEs should be allowed to pay lower percentage of taxes to allow enough funds for business growth and better chances of survival in a competitive market. The government should also consider increasing tax incentives such as exemptions and tax holidays as these will not only encourage voluntary compliance but also attract investors who are potential viable taxpayers in the future.