Assessing Tax Awareness, Taxpayers’ Trust in Governance and Tax Compliance Behaviour of Small and Medium Enterprises (SMEs) in Nigeria

Abstract

Over the years, the federal government of Nigeria has been putting efforts into reviewing tax law and regulations, which may have positive and negative effects on big, small, and medium-sized firms in Nigeria. Yet, there are suspicions that most small and medium business in Nigeria is characterized by a lack of tax awareness and non-compliance behaviour. Hence, this research investigated the connection between tax awareness, taxpayers’ trust in governance, and tax compliance behaviour of Small and Medium Enterprises in Nigeria. This research adopted both qualitative and quantitative approaches to research. This research employed a survey research approach by collecting primary data via the instruments of questionnaire.  The population for the study consisted of 39,654,385 SMEs registered in Nigeria as at January 2022, according to SMEDAN. The sample size of 400 SMEs was determined by the scientific approach of Taro Yamane's formula.  Moreover, multi-stage and judgmental sampling techniques were employed to select 40 respondents each from 5 Northern States, such as Kano, Kaduna, Kwara, Taraba, and Bauchi, and 5 states, such as Lagos, Oyo, Rivers, Imo, and Delta in southern Nigeria.  The findings of the study revealed that both tax awareness and taxpayers’ trust in governance have a significant positive effect on the tax compliance behaviour of SMEs in Nigeria. The study recommended, among others, that the government and its agencies should promote tax awareness campaigns and programmes. Also, the tax authorities and government should uphold the principles of accountability and transparency\ in governance in a bid to enhance taxpayers’ trust in governance.