THE SYNERGISTIC IMPACT OF MULTIPLE TAXATION AND REGULATORY BURDEN ON SMALL AND MEDIUM ENTERPRISES (SMES) GROWTH IN NIGERIA

Abstract

The study was on the impact of multiple taxation and regulatory burden on the growth of Small and Medium Enterprises (SMEs) in Nigeria. Specifically, the study explored how multiple taxation perceived at different category levels varied, the impact of multiple taxation and compliance burden on SME revenue growth, and the mediating effect of managerial distraction, depletion in working capital, and informality trap between multiple taxation and regulatory burden and SME revenue growth. The survey research design was used and a structured questionnaire was used to collect data from 300 SME operators. Descriptive statistics, One-Way Analysis of Variance (ANOVA), Ordinal Logistic Regression, and PROCESS Macro Model 4 by Andrew F. Hayes were employed for data analysis using SPSS version 27.

The results indicates that the perceived burden of multiple taxation varied significantly by the size category for SMEs, F(2, 297) = 4.516, p < .05, with the smallest size category seeing the highest multiple taxation. Multiple taxation and regulatory burden were found to negatively, significantly affect SME revenue growth, while access to formal credit and supply of electricity was found to positively affect SME revenue growth. Additionally, the PROCESS Macro analysis showed that managerial distraction, working capital depletion and informality trap played significant mediating roles between compliance burden and SME growth.

The study found that the split tax regime and excessive requirements in regulatory procedures are negatively impacting the sustainability and growth of SMEs both directly and indirectly in Nigeria. To improve SME performance and formalisation in Nigeria, the study recommended tax harmonisation, streamlined compliance regime, better access to credit facilities and infrastructural development.