THE IMPACT OF TAXATION ON SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA

ABSTRACT

The study examined the effect of taxation on SMEs in Nigeria spanning periods from 2000 to 2022 based on the accessibility of data. Four hypotheses were raised and evaluated using the robust least squares estimator. Based on the analysis conducted, the following findings were made that: personal income tax positively and significantly affects the performance of SMEs in Nigeria; value added tax negatively and insignificantly affect the performance of SMEs in Nigeria; company income tax significantly and negatively affects the performance of SMEs in Nigeria; and economic growth does not moderate the relationship between taxation and SME performance in Nigeria. As a result of this finding, it was recommended that: policymakers should consider revising personal income tax policies to make them more favorable to SME owners and employees; authorities should assess the VAT structure and consider potential adjustments; policymakers should review and possibly lower corporate tax rates for SMEs; and it is crucial for the government to continue its efforts to stimulate economic growth.