Determinants of Tax Compliance among SMEs In Edo
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Abstract
This study examines the determinants of tax compliance among small and medium enterprises (SMEs) in Nigeria. The research investigated the influence of six key factors—tax knowledge and awareness, taxpayer attitude and perception, multiple tax
rates, government transparency and accountability, enforcement and penalties, and complexity of the tax accounting system—on tax compliance behavior. A quantitative research design was adopted, and data collected from 142 SMEs were analyzed using descriptive statistics, correlation, and multiple regression techniques through E-Views 14.0.
The regression results revealed that taxpayer attitude and perception had a negative and significant effect on compliance, implying that negative perceptions about the tax system reduce taxpayers’ willingness to comply. Conversely, multiple tax rates and government transparency showed positive and significant effects, indicating that simplified rate structures and transparent governance enhance compliance. Tax knowledge, 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 explanatory power. Diagnostic tests showed no autocorrelation or heteroskedasticity, ensuring model reliability.
The study concludes that tax compliance among SMEs in Nigeria is primarily driven by institutional and perceptual factors rather than enforcement. It recommends improving government transparency, simplifying tax structures, and promoting positive taxpayer attitudes to enhance voluntary compliance
rates, government transparency and accountability, enforcement and penalties, and complexity of the tax accounting system—on tax compliance behavior. A quantitative research design was adopted, and data collected from 142 SMEs were analyzed using descriptive statistics, correlation, and multiple regression techniques through E-Views 14.0.
The regression results revealed that taxpayer attitude and perception had a negative and significant effect on compliance, implying that negative perceptions about the tax system reduce taxpayers’ willingness to comply. Conversely, multiple tax rates and government transparency showed positive and significant effects, indicating that simplified rate structures and transparent governance enhance compliance. Tax knowledge, 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 explanatory power. Diagnostic tests showed no autocorrelation or heteroskedasticity, ensuring model reliability.
The study concludes that tax compliance among SMEs in Nigeria is primarily driven by institutional and perceptual factors rather than enforcement. It recommends improving government transparency, simplifying tax structures, and promoting positive taxpayer attitudes to enhance voluntary compliance
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