Abstract
Tax is an important stream of revenue for government’s development projects. However, tax compliance amongSMEs is poor. Therefore, this study was conducted using SMEs in Zaria, North-Central Nigeria to evaluate andrank the factors that encourage non-compliance with tax obligation by SMEs. It was found that high tax rates andcomplex filing procedures are the most crucial factors causing non-compliance of SMEs. Other factors likemultiple taxation and lack of proper enlightenment affect tax compliance among the SMEs surveyed only to alesser extent. Therefore, it is recommended that SMEs should be levied lower percentage of taxes to allowenough funds for business development and better chances of survival in a competitive market. The governmentshould also consider increasing tax incentives such as exemptions and tax holidays as these will not onlyencourage voluntary compliance but also attract investors who are potential viable tax payers in the future.
Highlights
Most large companies have their roots in small and medium enterprises suggesting that the future large corporations are the SMEs of today that that must be nurtured to ensure their growth
Developing economies like Nigeria needs to further the development of its private sector by creating an environment favorable to the growth of SMEs, strengthening the factors that lead to business success, and addressing the problems threatening the existence and advancement of small and medium enterprises (Chu, Kara & Benzing, 2008), so they can adequately play the role expected of them in economic transformation
Based on the findings above, it can be concluded that when it comes to taxation of SMEs, high tax rates are the primary problem of entrepreneurs
Summary
Most large companies have their roots in small and medium enterprises suggesting that the future large corporations are the SMEs of today that that must be nurtured to ensure their growth. Developing economies like Nigeria needs to further the development of its private sector by creating an environment favorable to the growth of SMEs, strengthening the factors that lead to business success, and addressing the problems threatening the existence and advancement of small and medium enterprises (Chu, Kara & Benzing, 2008), so they can adequately play the role expected of them in economic transformation Such role includes mobilization of domestic savings for investment, appreciable contribution to gross domestic product, increased harnessing of local raw materials, employment generation, and significant contribution of poverty reduction efforts through sustainable livelihoods and enhancement in personnel income, technological development and export diversification (Smatrakalev, 2006). A study was conducted using SMEs in Zaria, North-Central Nigeria
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