Multiple Taxation Burden and the Survival of Small and Medium Enterprises in Lagos State, Nigeria

This study examined the effect of multiple taxation burden on the survival of small and medium enterprises (SMEs) in Lagos State, Nigeria. Small and medium enterprises are widely regarded as the backbone of Nigeria's economy, yet those operating in Lagos State, the country's most commercially dynamic jurisdiction, continue to grapple with an existential threat posed by overlapping tax obligations imposed simultaneously by federal, state and local government authorities. Despite growing scholarly attention to multiple taxation and SME outcomes in Nigeria, most existing studies predate the Nigeria Tax Reform Acts 2025. Specifically, the study assessed the effect of tax multiplicity on profitability, examined the effect of local government levies and informal taxation on survival rate, and investigated the influence of the Nigeria Tax Reform Acts 2025 on survival rate.
The study was anchored on the Ability to Pay Theory and adopted a descriptive survey research design. Primary data were obtained through a structured questionnaire administered to 370 formally registered SME operators drawn through multi-stage sampling across seven local government areas of Lagos State, namely Ikeja, Alimosho, Mushin, Oshodi-Isolo, Eti-Osa, Lagos Island and Surulere. Data were analysed using descriptive statistics and three separate simple linear regression models, one for each objective, all tested at the 5% level of significance.
Tax multiplicity had a negative and statistically significant effect on profitability (β = -0.701, R² = 0.539, F = 429.498, p < 0.01). Local government levies and informal taxation exerted a negative and significant effect on survival rate (β = -0.570, R² = 0.599, F = 40.458, p < 0.01). In contrast, the Nigeria Tax Reform Acts 2025 exerted a positive and significant effect on survival rate, the strongest relationship observed among the three models, explaining about 79% of its variation (β = 0.744, R² = 0.787, F = 63.186, p < 0.01). Consequently, all three null hypotheses were rejected.
The study concludes that SME survival in Lagos State is shaped by a dual tax burden in which tax multiplicity and informal local levies each independently threaten different aspects of business survival, while a well-implemented tax reform offers a genuine, though still incomplete, counterweight to this burden. The study recommends that tax authorities establish a single harmonised collection window for SMEs, that the Lagos State Government and local government authorities formally regulate and consolidate locally collected levies, and that unauthorised revenue collectors be eliminated.

Multiple taxation, SME survival, tax multiplicity, informal levies, Nigeria Tax Reform Acts 2025.

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