Taxation and its Implication on Small and Medium Scale Entreprises in Nigeria

Abstract

Small and medium scale businesses have increasingly been recognized as enterprises that contribute considerably to the creation of jobs, increasing the GDP and promoting entrepreneurship, henceforth contribute to poverty reduction and boosting the economies. Ideally too, taxes are necessary as they are being raised by the government to generate funds used to provide services to the public. Despite the benefits of taxes, the state of small businesses performance in Nigeria is still not encouraging. Hence, this study aimed to investigate the effect of taxation on small and medium scale enterprises in Nigeria. The study adopted the descriptive survey design. A well guided questionnaire was used as the instrument of data collection. Chi-square statistical analysis was used to analyze the result. The findings revealed that tax system in the country has negative impact on small businesses. Also, small businesses cannot compete with big industries. The study concludes that government should create a conducive environment to enhance the survival and sustainability of small enterprises and thereby recommended that small businesses be levied a lower percentage of taxes, increase tax incentives such as tax holidays to the micro enterprises, these will encourage the small enterprises and attract investors that are potential taxpayers.