Good Governance and Tax Compliance among SMEs in Nigeria: A Moderating Role of Socio-economic Factors

Abstract

Tax revenues have become a key factor to governance without which lots of government functions are impeded. There is a constant struggle on taxpayers’ compliance, especially among the small and medium enterprises in Nigeria due to taxpayers’ perceived deficiencies in governance. Specifically, this study was conducted to examine how transparency, accountability, and responsiveness of government influence tax compliance among Small and Medium Scale Enterprises in Nigeria. The study employed the survey research design. Data were collected from primary sources through the use of structured questionnaires distributed to the SMEs at their place of work. The study adopted a Simple random sampling technique. The population of the study consist of 967,468 registered SMEs in Ekiti state. A sample size of 400 was selected using Taro Yamane’s formula. Data collected were analyzed using descriptive statistics, structural equation model analysis, Ordinary Least Square (OLS) and regression analysis. The study found a positive significant relationship between the independent good governance and tax compliance among SMEs in Nigeria. The study concluded that good governance is positively and statistically related to tax compliance among SMEs in Nigeria which is an indication that good governance enhances tax compliance among SMEs in Nigeria. The study therefore recommended that government should also exhibit transparency, accountability and responsiveness in order to build public trust in the operators for tax compliance.