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Determinants of Tax Evasion by Small and Medium Scale Enterprises (SMES) in Makurdi Metropolis

Aondoakaa Isaiah Terkuma and, Akume James Terkende

Abstract

This study examined the determinants of tax evasion by Small and Medium Scale Enterprises in Makurdi metropolis, Benue State, Nigeria. The main objective was to investigate how selected factors influence tax evasion among SMEs, while the specific objectives were to assess the effect of age, income level, and educational level of SME owners on tax evasion. The study adopted a survey research design using structured questionnaires administered to SME operators. The population of the study comprised 1,124 registered SMEs in Makurdi metropolis, from which a purposive sample size of 242 SMEs was selected based on relevant criteria. Data collected were analyzed using descriptive statistics and multiple regression analysis. The findings revealed that age has a significant negative effect on tax evasion, indicating that older SME owners are less likely to evade taxes. Income level was found to have a significant positive effect on tax evasion, suggesting that higher-income SMEs have a greater tendency to evade taxes. Educational level showed a significant negative relationship with tax evasion, implying that higher levels of education enhance tax compliance among SME operators. The study concluded that demographic and economic characteristics of SME owners significantly influence tax evasion behavior in Makurdi metropolis. It was recommended that government and tax authorities should intensify taxpayer education, simplify tax procedures, and strengthen monitoring mechanisms, especially for high-income SMEs, to improve tax compliance.

Keywords

TaxationTax evasionSMEsAgeIncome levelEducational level

References

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