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Small and medium enterprises play a very important role in development of the Nigerian economy. The  SMEs  sector's  importance  in  the  economic  development  of  any  country  in recent  years  cannot  be  underrated  especially  with  regard  to  creation  of employment, innovation, uplifting the people‟s standard of living and financial contribution  to  the  growth  of  the  country‟s  GDP.  This  sector's  growth  is hindered  by  the  challenges  of  lack  of  financial  resources  to  expand,  the entrepreneur  managerial  skills,  unskilled  labour,  production  of  poor  quality goods,  lack  of  market for  their  products,  infrastructure  and  above  all  taxation policy  which  does  not  favour  their  growth  potential.  The study looked at the impact of tax influence on SMEs sector growth in Nigeria.   The study employed descriptive design.  Primary  data  was  collected  on  valuables  contributing  to  tax  influence and  their  effect  of  the  growth  of  SMEs. A total of 50 respondents were considered out of the entire population in the Lagos state. The  study  found  that  there  was  a  significant  correlation between  taxation  and  SMEs  sector  growth.  The study recommends that there be a friendly tax policy for all start up businesses preferably a tax holiday, or an introduction of a growth limit which can be said to be a level stable enough to sustain tax payment. It also recommends that, LSRA; should supply tax assessment forms in time, intensify on the sensitization different tax rates and introduce a scheme that allows taxpayers to pay the tax obligation in installment to better the profitability of small-scale businesses. There is therefore need for more research on firms‟ management techniques, the role of bookkeeping and profitability of small and micro




1.1 Background of the Study

The desire to build a civilized country with a strong and sound economy is the desire of every country, including Nigeria. Tax payment is the demonstration of such desire, although some income earners see it as a means of exploitation by the government. Tax payment is a voluntarily contribution imposed by the government on personal income earners, companies, investors, exporters, importers etc. Revenue realized from taxation is a major source of revenue to the government of Nigeria, and as such is important tool used in development of Nigeria and her economy. A country‚Äüs tax policies and systems are greatly related with the business ventures in the country. An economy that enacts favourable and progressive tax laws and policies will definitely breed successful and finance healthy business organizations. Once business flourish, the economy flourishes as well, as there is no quicker way of stirring up the matters of economy without help of organizations that move services, goods, money and investments from those with surplus to those with deficit; those with marketable ideas/ output to those who need these ideas and products. In essence, businesses and tax policies greatly depend on one another for survival.

If one is greatly affected the other follows suit.

Multiple taxes are not an established term in the field of taxation as such.  Thus, the term seems to be peculiar to Nigerian fiscal environment. According to the National Tax Policy Document, multiple taxation occur “where the tax, fee or rate is levied on the same person in respect of the same liability by more than one State or Local Government Council (the national tax policy document).  From the general usages of multiplicity of taxes by stakeholders, it can be said to manifest in at least four ways (Abiola, 2012). 

The Nigerian tax system has undergone significant changes in recent times. With the help of various studies and research done by tax experts, tax laws are being reviewed with the aim of repelling obsolete provisions and simplifying the main ones. Under current Nigerian laws, taxation is enforced by two tiers of the government, i.e National government and county government with each having its sphere clearly spelt out in taxes and levies.

Small business enterprises are generally recognized as important drivers of economic success. They are key ingredient in the ‚Äěecology of firms‚Äü in healthy economy, as job creators, sales generators and source of tax/ fiscal revenue. In Nigeria the importance of small business enterprises as a creator of jobs, particularly for those with low skills level, is widely recognized.

SMEs contribute 25% of the country‚Äüs gross domestic product (GDP) and employ about 60% 0f the workforce in the private sector. In agriculture, construction and retail sector SMEs employ more than 75% of the total workforce. Over the last few years the growth of SMEs employment has exceeded the growth in their contribution to the GDP the reason why the Nigerian government has been notably supporting them through financial institutions credit lending.

Regulations and multi-tax policies are reported to be one of the constraints to the expansion of small businesses in Nigeria and internationally. However, these enterprises like any other business Nigeria are liable to different types of taxes and these include income tax, corporation tax capital gain tax, sales tax and customs duties that are paid at different stages of the business. For purposes of this study the emphasis is put on income tax which is levied on the incomes of all Nigerian residents.  

1.2 Statement of the problem

It is believed that multi-tax rates that are charged on small and medium enterprises are not accurate since its base on assumptions without assessing the actual turnover of the enterprise, yet at times these enterprises may be making losses. It is alleged that high multi-tax rates affect the level of consumption and increase the unit cost. Profit maximization is the major goal of every small-scale enterprise.  However, this seems not to be a reality as most of them cannot achieve this goal.

Multi-tax administration plays a pertinent role regarding revenue collection as well as profitability of any business entity. In an effort for the government to increase its tax base, the tax burden for many firms increases. However, the multi-tax administration system is poor as at times, the tax liability computation is based on estimates, records of many small business firms are incomplete, and some miss out completely leading to multi-tax over charge. In return, this directly affects the growth of the enterprise and may threaten its survival because taxes are paid out of profits. Therefore, failure to have an effective multi-tax administration system adversely affects the survival and profitability of small-scale businesses in Nigeria.

Based on this identify gap, the study will analyze the effect of multi-taxation on survival of small and medium scale enterprises in Nigeria with particular reference to selected small and medium scale enterprise in Lagos state.

1.3 Purpose of the Study

The purpose of the study was to establish the effect of multi-tax administration on the survival of small-scale business enterprises in Lagos state.

1.4 Objectives of the Study

The study was guided by the following research objectives;

1.      To determine how multi-tax rate affects survival of small-scale business enterprises in Lagos state.

2.      To determine the tax policy used to administer multi-tax on small-scale business enterprises in Lagos state

3.      To establish the types of tax that affects the growth of small-scale business enterprises in Lagos state.

1.5 Research Questions

The study was guided by the following research questions;

i.                 How multi-tax rate affects the survival of small-scale business enterprises in Lagos state?

ii.               Which tax policy is administered on small-scale business enterprises in Lagos state?

iii.             What is the types of tax that affect the growth of small-scale business enterprises in Lagos state?

1.6 scope of the study

This research mainly focuses on the effect of multi-tax policies on the economy of small business enterprises in Nigeria more particularly in Lagos state which is the center of commerce.  The study only delimits itself to the challenges on the tax policies in Nigeria to the small business enterprises and how it can affect survival of the business, self-employed business persons, traders and other forms of sole proprietorship businesses 

1.7 The significance of the study

The findings will benefit the different stakeholders as explained below:

1.      The traders- they will learn their duties as tax payers.  Taxes being one of the operational costs of business and must be paid.

2.¬†¬†¬†¬†¬† The legislature Assembly (Parliament) ‚Äď will amend parts of the Tax Act which are unfair to small scale traders.

3.      Lagos state revenue authority (LSRA) will use appropriate trader friendly methods when collecting taxes.  The Authority will get to know about corruption tendencies of its officials in the tax administration.

4.      The county government, to revise tax rates downwards and fight corruption among tax collectors.

5.      The West African Legislative Assembly, to revise tax rates so that exports and import trade can be done cheaply within West Africa.

6.      The general public, they will learn that every business has to pay different forms of taxes.  This is because a tax is a compulsory operational business expense.  Even other researchers on this topic will use it as reference for future research.

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