Effect of Multiple Taxation on the Financial Performance of Small and Medium Enterprises (SMEs) in Ekiti State, Nigeria

Abstract

The performance and growth of business enterprises, especially small and medium enterprises (SMEs), have been hindered by a multiplicity of taxes causing the untimely liquidation of most businesses. In this regard, this study examined the effect of multiple taxations on the financial performance of SMEs in Ekiti State, Nigeria. The study used a survey research method and analyzed it with correlation coupled with multiple regression analysis. The population comprises all registered and functional SMEs located in Ado Ekiti, Nigeria, and have been in existence for over 5 years with valid proof of tax payment. The results found that multiple tax burdens and multiple tax administrations exhibited a significant negative relationship with the financial performance of SMEs in Ekiti State, Nigeria, while the ability to pay tax revealed a significant positive relationship. From the aforementioned results, it was concluded that multiple taxes served as a worm that deeply reduced the investment potential of SMEs and invariably affected the chunk of revenue generated by the sector in the state. It was therefore suggested that the Joint Tax Board in the state and other institutions responsible for multiple tax management should awaken to their functions and harmonize all government revenue to prevent the occurrence of multiple taxes from causing a burden and hindering the survival of SMEs in the state.

Non-financial disclosure and firm performance: Insights from listed consumer goods manufacturing companies in Nigeria

“…The theory suggests that businesses have a responsibility to a wide range of stakeholders, including employees, suppliers, customers, government, investors, and the community. It recognizes that a company's success lies in meeting the needs of all stakeholders, not just shareholders (Adewara et al, 2023;Dada et al, 2023;Dagunduro et al, 2023;Kolawole et al, 2023). However, one limitation of the theory is the challenge of pleasing all stakeholders simultaneously due to their diverse interests.…”

Sustainable business practice and going concern of selected listed manufacturing companies in Nigeria

“…According to stakeholder theory, 'managing for stakeholders' entails addressing the interests and wellbeing of these stakeholders, at the very least (Adewara, Dagunduro, Falana, & Busayo, 2023). This theory aligns closely with the principles of Sustainable Business Practice (SBP) as both share a common goal (Freeman, Phillips, & Sisodia, 2020).…”

“…Moreover, the ethical and moral foundation of stakeholder theory provides a broad spectrum of possibilities for SBP. Previous literature has demonstrated the practical application of stakeholder theory in supporting its fundamental premise that companies should contribute positively to society (Adewara et al, 2023;Dagunduro et al, 2022). One of the core tenets of this theory is the emphasis on stakeholder inclusiveness, ensuring that shareholders, management, employees, customers, suppliers, and local communities all feel valued and included.…”

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“…Tax administration aims to ensure that tax revenues are collected efficiently, fairly, and in accordance with the legal framework, while also addressing issues related to tax evasion, avoidance, and enforcement. Effective tax administration is essential for funding government activities, public services, and infrastructure development (Adewara et al, 2023;Owenvbiugie & Owenvbiugie, 2020). It is, thus, the argument of this study that tax administration should have positive influence on the revenue generation capacity of states in Nigeria.…”

“…They encompass the processes and activities related to the collection, management, and utilization of tax revenues, which are critical for funding public services, government operations, and overall economic development. Tax authorities are responsible for the collection of various forms of taxes, such as income tax, sales tax, property tax, corporate tax, and others (Adewara et al, 2023). Tax administration involves tasks like taxpayer registration, tax return processing, audit and enforcement of tax laws, and maintaining taxpayer records.…”