Determinants of Tax Compliance among SMEs

This study examines the determinants of tax compliance among small and mediumenterprises (SMEs) in Nigeria. The research investigated the influence of sixkeyfactors—tax knowledge and awareness, taxpayer attitude and perception, multipletaxrates, government transparency and accountability, enforcement and penalties, andcomplexity of the tax accounting system—on tax compliance behavior. Aquantitativeresearch design was adopted, and data collected from 142 SMEs were analyzedusingdescriptive statistics, correlation, and multiple regression techniques through E-Views14.0. The regression results revealed that taxpayer attitude and perception had a negativeandsignificant effect on compliance, implying that negative perceptions about thetaxsystem reduce taxpayers’ willingness to comply. Conversely, multiple tax rates andgovernment transparency showed positive and significant effects, indicatingthat simplified rate structures and transparent governance enhance compliance. Taxknowledge, enforcement, and system complexity were not statistically significant, suggesting that knowledge and penalties alone may not guarantee compliance without trust and institutional integrity. The model was statistically significant (F-statistic =5.45, p < 0.01) with an adjusted R² of 0.16, confirming a moderate explanatorypower. Diagnostic tests showed no autocorrelation or heteroskedasticity, ensuringmodel reliability. The study concludes that tax compliance among SMEs in Nigeria is primarily drivenbyinstitutional and perceptual factors rather than enforcement. It recommends improvinggovernment transparency, simplifying tax structures, and promoting positive taxpayerattitudes to enhance voluntary compliance.