Determinants of Tax Non-Compliance Behaviour Among Small and Medium Enterprises in Oyo State, Nigeria
Keywords:
Tax non-compliance, Tax amnesty, Tax knowledge, Tax evasion, Tax officials, CorruptionAbstract
The informal sector of the Nigerian economy consists of self-employed individuals whose personal and business income are not easily determined for tax purposes by tax officials. The extent to which they comply with tax laws and faithfully declare their income to tax officials determine the amount of tax revenue realized from them. To this end, the study investigates the determinants of tax noncompliance behaviour among the small and medium enterprises in Oyo State, Nigeria. Primary data were gathered using structured questionnaires from sample of 550 SMEs operators randomly selected within three Local Government Areas (LGAs) in Ibadan, the capital city of Oyo State. Descriptive statistics and probit logistic regression technique were used to analyse the data to achieve the study’s objective. Findings reveal that corruption of tax officials and administrators, and tax compliance costs are the major determinants of tax noncompliance. They increase the incidence of tax noncompliance among SMEs in Oyo State. Besides, tax knowledge, tax audit, tax penalty, and tax amnesty are found to reduce the incidence of tax noncompliance among the SMEs taxpayers in Oyo State. It was recommended that tax officials’ surveillance should be frequently carried out by agencies of government that deal with fighting economic fraud and corruption. Also, tax education should be inculcated in the school curriculum from primary to tertiary education levels, and tax audits of SMEs should be frequently carried out by tax officials.
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