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Tax payment is a voluntarily contribution imposed by the government on personal income earners, companies, investor, exporters, and importers. Revenue realized from taxation is a one of the major source of revenue to the government of cross river, and is an important tool used in development of cross river and its economy. There is no generally accepted definition of a “small” business, and that most persons who use the term do so without having in mind any specific definition of size. One can, of course, classify business firms by such quantitative criteria as the number of employees, total assets, or total sales, and then designate certain size classes as representing small business.

According to Manasseh (2000), a tax is generally referred to as a compulsory levy imposed by government upon assesses of various categories and taxation is a compulsory and nonrefundable contribution imposed by government for public purposes. In Nigeria a considerable fraction of the businesses are sole traders operating small scale business.

Asmelash (2002) describe small scale enterprises as an activities engaged by people who are unable to secure paid jobs or start economic activities of their choice. These kinds of business are family oriented and are often manage or controlled as family business. It is an accepted fact that small and medium scale is an engine to economic growth of the economy. Governments, and even policy makers and academics, take the survival of small scale enterprise very serious because of their roles in economic development.

Many small scale business promoters find it easy to start the business because of little capital involved. The small scale business entrepreneurs serve as commercial nerve center of Nigeria, are confronted with diverse problems which often leads to liquidation of their business. One of the main challenges confronting small scale business promoters is the issue of tax.

According to Arnold and Mclntyre (2002), tax is a compulsory levy imposed by government on citizen income and consumption of goods and services. Adeniyi and Adesunloro (2017) view tax as an important avenue for government to raise money in order to finance her projects and program. The fundamental philosophy of taxation is taking from the citizens according to their abilities and giving back to them according to their needs.

According to Decree 28 of 1998, there are categories of taxes and levies to be collected by federal government, state government and local government in Nigeria. The issue of multiplicity of revenue has not been addressed. For example, licensing fee for sales of liquor, commercial premises rate and corporate parking fees within company premises. This can be regarded as sales tax because it excludes value added tax that federal government will collect from the business on the same service rendered. In support of Yaobin (2007), this form of multiple taxes may endanger sustainability of small scale enterprises in the area.

The Nigerian Tax System has undergone significant changes in recent times. With the help of various studies and research done by tax experts, tax laws are being reviewed with the aim of repelling obsolete provisions and simplifying the main ones. Under current Nigerian law, taxation is enforced by the Federal, State, and Local Government with each having its sphere clearly spelt out in the Taxes and Levies. Small businesses are generally recognized as important drivers of economic success. They are a key ingredient in the “ecology of firms” in a healthy economy, as job creators, sales generators and a source of tax/fiscal revenue. In Nigeria the importance of small business as a creator of jobs, particularly for those with a low skills level, is widely recognized. Small, medium and micro-enterprises (“SMMEs”) contribute 36.1% of the country’s gross domestic product (“GDP”) and employ 68.2% of the workforce in the private sector. In the agriculture, construction and retail sectors, SMMEs employ more than 80% of the total workforce.

Regulations and red tape are reported as one of the constraints to the expansion of businesses both in Nigeria and internationally. International research in this field shows that tax regulatory compliance costs are a significant portion of the total regulatory cost. Several other patterns emerged from the various local and international studies performed, among the most important being that tax compliance costs comprise a much larger proportion of total compliance costs for smaller firms.


According to the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), 80% of small businesses die within seven years of its establishment. Among the factors responsible for these untimely close-ups are tax related issues, ranging from taxations to enormous tax burdens etc. Therefore, in dealing with small enterprises, these unique qualities need to be considered. Another problem faced with Small scale enterprises in Nigeria is that the levying of taxes for these enterprises in particular, issues that need to be considered are how these tax policies can be designed to bolster the growth of Small businesses and the most effective ways to administer them. The importance of Small businesses as a mechanism of economic growth and development is often ignored. They are perceived as minute establishments that have minimal effect on the state of the economy.

However, if conducive environment is created for these Small businesses to grow through proper regulation, the sector has the highest propensity to transform our economy. Tax burden is another major problem in Nigeria as many business organizations are not favored by the tax systems and policies in place. Some businesses are already collapsing; while majority are still struggling to meet up with high tax rates to ensure their businesses still exist. According to a study conducted by Bateman (2013), it was reported in a survey that 90% of business owners admitted that taxes were a huge constraints to their businesses, as they claim taxes are high and do not allow new businesses to cover up initial cost. 


The study sought to assess the impact of taxation on performance of small scale enterprise. Specifically, the study sought to;

  1. ascertain the effect of multiple tax burden on the performance of small scale enterprises.
  2. assess the relationship between taxation and performance of small scale enterprise.
  3. examine the implications of tax policy on survival and growth of small scale enterprises.


  1. What is the effect of multiple tax burden on the performance of small scale enterprises?
  2. What is the relationship between taxation and performance of small scale enterprise?
  3. What are the implications of tax policy on survival and growth of small scale enterprises?


Ho1: Multiple tax burden has no effect on the performance of small scale enterprises.

Ho2: There is no relationship between taxation and performance of small scale enterprise.

Ho3: Tax policy has no implication on the survival and growth of small scale enterprises.


This study will be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.


This study is on the impact of taxation on the performance of small scale enterprise.

Limitations of study

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8       Definition of Terms

Taxation: Is the imposition of compulsory levies on individuals or entities by governments

Small Scale Enterprise: A small-scale enterprise is a business that employs a small number of workers and does not have a high volume of sales. Such enterprises are generally privately owned and operated sole proprietorships, corporations or partnerships.


Arnold, J.B. & Mclntyre, J.M. (2002). International Tax Primer. 2 nd Edition. Kluwer Law International, the Hague, the Netherlands.

Asmelash, B. (2002). Enhancing the competitiveness and productivity of small and medium scale enterprises (SMEs) in Africa: An analysis of differential roles of national governments through improved support services. Africa Development journal, 23(3/4), pp. 130 – 156.

Yaobin.S.(2007). Tax, small business, growth: effect of taxation on investment and cross border trade. Paper presented at the ITD Conference on Taxation of SMEs.

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