Effect of tax non-compliance on the performance of small and medium scale enterprise in Kaduna metropolis, Kaduna State

Abstract

This study investigates the impact of tax non-compliance on the performance of Small and Medium Scale Enterprises (SMEs) in Kaduna Metropolis. SMEs are vital for economic development, providing employment and contributing to Nigeria's GDP. However, tax non-compliance presents a significant challenge, undermining fair competition and reducing government revenue for public services. The research aims to assess the influence of tax knowledge, tax penalties, and tax complexity on SMEs' compliance and overall performance. Utilizing a survey methodology, data was gathered from registered SMEs, and analyzed using multiple regression analysis. Findings reveal that inadequate tax knowledge, complex tax regulations, and ineffective penalties contribute to tax non-compliance, negatively affecting SME performance. The study highlights the need for enhanced tax education, simplified tax systems, and balanced penalties to foster compliance and support SME growth. These insights can inform policymakers in creating a more supportive tax environment for SMEs, promoting sustainable economic development in the region.