Tax Multiplicity, Compliance Cost and Financial Sustainability of Small and Medium-Scale Enterprises in Oyo State, Nigeria

This study examines the effect of tax multiplicity, compliance cost and financial sustainability of small and medium-scale enterprises in Oyo State, Nigeria. Primary data was obtained through the administration of structured questionnaire to 244 respondents out of total population of 625 comprising of Owner (s), Manager and Account officers. Data obtained was analyzed using descriptive, regression analysis via Partial Least -Structural Equation modelling (PLS-SEM). The results of the analysis obtained revealed that the compliance costs and tax multiplicity had negative and significant effect of financial sustainability (business survival) (t-stat = -2.33, p<0.05) and (t-stat= -6.11; p<0.05). In addition, the results revealed that the compliance costs (t-stat =-4.94, p<0.05) and tax multiplicity (t-stat= -5.22; p<0.05) had negative and significant effect on financial sustainability (operational efficiency), this implies that high compliance costs associated with tax multiplicity eroded the profit margins for SMEs. The study concludes that the negative effects of tax multiplicity and compliance costs significantly undermine the financial sustainability of SMEs in Nigeria. It is recommended that the government should streamline compliance requirements to reduce complexity and make it easier for SMEs to meet their obligations.

compliance costs, financial sustainability, operational efficiency, Tax multiplicity

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