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An Examination of the Challenges of Taxing Informal Businesses in Nigeria: A Study of Kano's Sabon Gari Market

  • Project Research
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  • Abstract : Available
  • Table of Content: Available
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  • NGN 5000

Background of the Study
The informal sector plays a critical role in Nigeria's economy, accounting for a substantial portion of employment and economic activity. However, taxing this sector remains a significant challenge due to its unstructured nature, limited record-keeping, and resistance to formalization (Eze & Ahmed, 2024). Kano's Sabon Gari Market, one of the largest and most vibrant informal markets in Nigeria, exemplifies the complexities of taxing informal businesses.

Efforts to tax informal businesses often encounter challenges such as distrust of tax authorities, lack of awareness, and perceived inefficiency in the use of tax revenues. These issues undermine compliance and hinder the government's ability to generate revenue from a critical segment of the economy (Olowookere & Adebayo, 2023). This study examines the specific challenges of taxing informal businesses in Kano's Sabon Gari Market, exploring potential solutions to improve compliance and revenue collection.

Statement of the Problem
Despite its economic significance, the informal sector contributes minimally to government revenue in Nigeria. Taxing informal businesses in Sabon Gari Market is particularly difficult due to the absence of formal structures, inadequate taxpayer education, and a lack of trust in the tax system. These challenges limit the effectiveness of existing tax policies and perpetuate non-compliance (Mustapha & Yakubu, 2024).

This study seeks to identify and analyze the challenges of taxing informal businesses in Sabon Gari Market, offering recommendations for addressing these issues to enhance compliance and revenue collection.

Objectives of the Study

  1. To identify the challenges of taxing informal businesses in Sabon Gari Market.
  2. To evaluate the impact of these challenges on tax compliance.
  3. To propose strategies for improving tax compliance among informal businesses in Sabon Gari Market.

Research Questions

  1. What are the challenges of taxing informal businesses in Sabon Gari Market?
  2. How do these challenges affect tax compliance?
  3. What strategies can improve tax compliance among informal businesses in Sabon Gari Market?

Research Hypotheses

  1. Taxing informal businesses in Sabon Gari Market faces significant challenges.
  2. These challenges negatively impact tax compliance in the informal sector.
  3. Implementing targeted strategies improves compliance among informal businesses.

Scope and Limitations of the Study
The study focuses on informal businesses in Kano's Sabon Gari Market from 2023 to 2025. Limitations include difficulties in obtaining reliable data from informal business owners and potential resistance to participation in the study.

Definitions of Terms

  • Informal Businesses: Enterprises operating outside formal regulatory and tax frameworks.
  • Tax Compliance: Fulfillment of tax obligations by businesses or individuals.
  • Sabon Gari Market: A major commercial hub in Kano, Nigeria, dominated by informal businesses.




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