Determinants of Tax Non-compliance Behaviour of Small and Medium Scale Enterprises in Nigeria

Abstract

The unpredictable nature of crude oil prices in the market requires the government of any economy to develop solid tax bases by generating income from sources especially small and medium enterprises (SMEs) to guarantee revenue that can engender sustainable fiscal policy. This study, therefore, focuses on evaluating and prioritizing the motive toward tax compliance and avoidance among registered SMEs, with at least five years of operational experience, in Lagos, Nigeria. A cross-sectional survey design was adopted with primary data gathered from 382 SME owners/managers derived from the multi-stage sampling technique. Utilizing the Analytical Hierarchy Process (AHP), data gathered were analysed. The results revealed that, out of the six tested, economic criteria and their factors are the most important criteria influencing both tax avoidance and compliance decision. Moreover, to strategically enhance SMEs’ tax compliance, government spending, economy, and fiscal policy need to be logically positioned in favour of SME operators.

Keywords

• tax avoidance
• tax compliance
• ahp
• smes
• nigeria