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Abstract
This study examined the impact of Value Added Tax (VAT) policies on the growth of Small and Medium Enterprises (SMEs) in Ovia North East Local Government Area of Edo State. The research was carried out to evaluate the level of VAT compliance
among SMEs, determine the relationship between VAT policy and profitability, assess the administrative burden of VAT on operational efficiency, and analyze the perception of SME operators regarding VAT and business sustainability. The study
adopted a descriptive and inferential research design. Data were collected through structured questionnaires distributed via Google Forms and face-to-face administration, with 300 valid responses analyzed using SPSS Version 25. Analytical
tools such as descriptive statistics, Pearson correlation, multiple regression, and Chi- square tests were employed to test the hypotheses. Findings revealed a significant positive relationship between VAT compliance and SME growth, indicating that firms
with higher compliance levels tend to perform better in the long run. VAT policies were found to have a considerable impact on profitability and operational efficiency, while administrative challenges remained a major constraint to full compliance. Furthermore, the study showed that SMEs’ perception of VAT significantly affects their willingness to comply and sustain business operations. The study concluded that VAT can enhance SME growth if well managed and supported by simplified tax administration. It recommended that government agencies improve tax education, reduce compliance costs, and enhance digital tax systems to encourage broader SME participation in the VAT scheme.
among SMEs, determine the relationship between VAT policy and profitability, assess the administrative burden of VAT on operational efficiency, and analyze the perception of SME operators regarding VAT and business sustainability. The study
adopted a descriptive and inferential research design. Data were collected through structured questionnaires distributed via Google Forms and face-to-face administration, with 300 valid responses analyzed using SPSS Version 25. Analytical
tools such as descriptive statistics, Pearson correlation, multiple regression, and Chi- square tests were employed to test the hypotheses. Findings revealed a significant positive relationship between VAT compliance and SME growth, indicating that firms
with higher compliance levels tend to perform better in the long run. VAT policies were found to have a considerable impact on profitability and operational efficiency, while administrative challenges remained a major constraint to full compliance. Furthermore, the study showed that SMEs’ perception of VAT significantly affects their willingness to comply and sustain business operations. The study concluded that VAT can enhance SME growth if well managed and supported by simplified tax administration. It recommended that government agencies improve tax education, reduce compliance costs, and enhance digital tax systems to encourage broader SME participation in the VAT scheme.
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