Evaluation of Tax Reforms on the Performance of Small and Medium-Scale Enterprises (SMEs) in Nigeria: Implications for Corporate Governance

Abstract

Small and Medium-Scale Enterprises (SMEs) (SMEs) play a critical role in Nigeria’s economic development through employment generation, poverty reduction, and wealth creation. This study examined the effect of tax reforms on the performance of SMEs in Nigeria with implications for corporate governance. The study adopted a descriptive survey research design and targeted a population of 7,468 registered SMEs operating within Ibadan metropolis, Oyo State. A sample size of 380 SMEs operators was determined using the Taro Yamane formula, while 268 duly completed questionnaires were retrieved and analyzed. Data were analyzed using descriptive statistics and multiple regression techniques. The results revealed that awareness and compliance with tax reforms (β = 0.322, p < 0.05), tax clarity (β = 0.228, p < 0.05), tax incentives (β = 0.417, p < 0.05), and governance practice adoption (β = 0.270, p < 0.05) exert significant positive effects on The performance of SMEs. The study further identified poor taxpayer education, complex tax filing procedures, and multiple taxation as major challenges limiting the effectiveness of tax reforms. The regression model produced an R² of 0.581, indicating that tax reform variables explained 58.1% of the variation in the performance of SMEs, while the F-statistic of 3.594 confirmed the overall significance of the model. The study concluded that effective tax reforms can significantly boost the growth of SMEs, sustainability, compliance, and corporate governance in Nigeria. The study recommends enhancing taxpayer education, simplifying tax administration, expanding access to incentives, eliminating multiple taxation, and strengthening governance frameworks to improve tax reforms and the performance of SMEs.