DETERMINANTS OF VOLUNTARY TAX COMPLIANCE AMONG SMALL AND MEDIUM SCALE ENTERPRISE (SMEs) IN THE AGRICULTURAL SECTOR OF NASARAWA STATE

Abstract

The study examined the determinants of Voluntary Tax Compliance Among Informal Small and Medium Scale Enterprises (SMEs) in the Agricultural Sector of Nasarawa State. The study employs survey research design, and the population is limited to only 504 active SMEs in Agricultural sector of Nasarawa State, which comprises of 1,008 respondents. However, a sample size of 286 respondents were selected using Taro Yamane, (1967) formula. A simple random sampling technique was employed in selecting the SMEs used for the study. A close- ended questionnaire with a Cronbach alpha value of 72% was utilized in collection of data from CEO/managers of the sampled SMEs, of which 224 questionnaires were retrieved while panel multiple regression technique was used for the analysis. The study revealed that tax knowledge, tax audit, tax rate Tand tax penalty exert positive significant effect on tax compliance while tax system complexity and perception of tax fairness exhibit negative but significant effect on tax compliance of sampled SMEs in Nasarawa State. The study thus recommends among others that, government should simplify and streamline tax laws and regulations to enhance the understandability and accessibility for taxpayers as this increases the level of tax compliance. The study also recommends that, government should endeavor to develop specialized and targeted educational programs that focus on the unique needs and challenges faced by SMEs in understanding and fulfilling their tax obligations.