For correspondence:-
Received: October 28, 2020 Accepted: December 20, 2020 Published: December 31, 2020
Citation: Taxation and Small Business; Challenges and Prospects in Nigeria. Account Tax Rev 2005; 4(4):67-77 doi:
© 2005 The authors.
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Abstract
Nigeria is governed by a federal system; hence its fiscal operations also adhere to the same principle. This has severe implications on how the tax system is managed in the country. Small and medium enterprises (S.M.E.s) are considered the backbone of economic growth in all countries. Most S.M.E.s in Nigeria die within their first five years of existence, a smaller percentage goes into extinction between the sixth and tenth year while only about five to ten percent survive, thrive and grow to maturity Exploratory design was adopted for the study, as several extant literatures related to the concept of taxation and S.M.E.s in Nigeria were reviewed. Findings revealed that S.M.E.s are the channel for improving domestic markets' efficiency and making productive use of scarce resources, thus facilitating long-term economic growth in poor countries. By creating employment, the disposable incomes will rise further, contributing to the increase of the social standards. Consumption will also increase, impacting positively on the national incomes. The S.M.E.s cannot compete for business with larger companies, and thus, there is a need for governments to accelerate their growth by creating an enabling environment for them via appropriate tax incentives to enhance their sustenance and growth. Also, tax policy will enable the government to generate maximum revenue without affecting the survival of the small businesses. It is recommended that SMEs should be levied a lower percentage of taxes to allow enough funds for business development 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 encourage voluntary compliance and attract investors who are potentially viable tax payers in the future.
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