0704-883-0675     |      dataprojectng@gmail.com

The Impact of Tax Compliance on Financial Reporting in Nigerian SMEs: A Case Study of Abuja-Based SMEs

  • Project Research
  • 1-5 Chapters
  • Abstract : Available
  • Table of Content: Available
  • Reference Style:
  • Recommended for :
  • NGN 5000

Background of the Study

Tax compliance is a critical element in the economic framework of any nation, serving as a primary source of government revenue. For Small and Medium Enterprises (SMEs), tax compliance extends beyond legal obligations, as it influences financial reporting quality and operational efficiency (Ibrahim & Aliyu, 2023). In Nigeria, SMEs constitute over 80% of registered businesses and play a pivotal role in economic development (National Bureau of Statistics [NBS], 2024).

However, the relationship between tax compliance and financial reporting remains complex. Many Nigerian SMEs face challenges such as inadequate knowledge of tax regulations, high compliance costs, and a lack of trust in tax authorities (Ogunwale et al., 2024). These issues often lead to poor compliance levels, which, in turn, undermine the accuracy and reliability of financial reports. Abuja, being a hub for SMEs, presents a unique setting to explore these dynamics.

This study investigates how tax compliance affects financial reporting among Abuja-based SMEs, focusing on key areas such as compliance levels, reporting accuracy, and regulatory adherence. The findings aim to inform policymakers on strategies to improve compliance and enhance financial transparency.

Statement of the Problem

Despite various tax reforms in Nigeria, compliance rates among SMEs remain low, with only about 40% of registered SMEs reportedly fulfilling their tax obligations (NBS, 2024). Non-compliance not only deprives the government of revenue but also affects the financial reporting quality of SMEs, leading to inaccurate records, regulatory breaches, and limited access to external funding (Adesina & Ojo, 2024).

Existing research often highlights the challenges of tax compliance but fails to adequately address its impact on financial reporting practices. This gap is particularly evident in Abuja, where SMEs encounter unique regulatory and economic pressures. Addressing this issue is vital for enhancing tax compliance and fostering reliable financial reporting among SMEs.

Objectives of the Study

  1. To evaluate the relationship between tax compliance and financial reporting accuracy in Abuja-based SMEs.

  2. To analyze the impact of tax compliance on regulatory adherence in financial reporting.

  3. To assess the influence of tax compliance on access to external funding for Abuja-based SMEs.

Research Questions

  1. What is the relationship between tax compliance and financial reporting accuracy in Abuja-based SMEs?

  2. How does tax compliance affect regulatory adherence in financial reporting?

  3. What is the impact of tax compliance on access to external funding for Abuja-based SMEs?

Research Hypotheses

  1. H₀₁: Tax compliance does not significantly affect financial reporting accuracy in Abuja-based SMEs.

  2. H₀₂: Tax compliance has no significant impact on regulatory adherence in financial reporting.

  3. H₀₃: Tax compliance does not significantly influence access to external funding for Abuja-based SMEs.

Scope and Limitations of the Study

The study is limited to SMEs operating in Abuja, examining the impact of tax compliance on financial reporting practices. It focuses on compliance levels, accuracy of financial reports, and adherence to regulatory standards. Limitations include the availability of reliable data from SMEs and potential biases in self-reported compliance levels.

Definitions of Terms

  • Tax Compliance: The degree to which taxpayers meet their tax obligations as required by law.

  • Financial Reporting: The process of preparing and presenting financial information in accordance with regulatory standards.

  • Regulatory Adherence: The extent to which a firm complies with laws and regulations governing financial reporting.

  • External Funding: Financial resources obtained from external sources, such as loans or investments.

  • SMEs (Small and Medium Enterprises): Businesses with limited scale in terms of staff size, revenue, and capital investment, as defined by national standards.





Related Project Materials

Evaluation of Responsibility Accounting in Public Sector Transparency in Kontagora LGA

Background of the Study

Responsibility accounting is a managerial accounting system th...

Read more
An Assessment of Franchise Business Models in Nigeria: A Study of Quick-Service Restaurants in Kaduna State

Background of the Study

The franchise business model involves a contractual relationship between a franchisor and a fran...

Read more
THE IMPACT OF EARLY CHILDHOOD EDUCATION ON UNDERSTANDING BIODIVERSITY

ABSTRACT: This study investigates the impact of early childhood education on young children's understanding of biodiversity. The introduct...

Read more
TREASURY SINGLE ACCOUNT: A VIABLE TOOL FOR REPOSITIONING GOVERNMENT MINISTRIES, DEPARTMENTS AND AGENCIES (MDAS) FOR SUSTAINABLE DEVELOPMENT IN NIGERIA

Abstract

Treasury Single Account (TSA) policy in Nigeria is a government accounting system under which all government re...

Read more
THE EFFECT OF ENVIRONMENTAL FACTORS ON THE SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA

STATEMENT OF THE PROBLEM

The effects of environment on organizational performance vary from one situation to another. Th...

Read more
Assessing the Use of Questionnaires in Evaluating Attendee Experience in Jalingo Local Government Area, Taraba State

Chapter One: Introduction

1.1 Background of the Study
Evaluating attendee experience is crucia...

Read more
The Impact of Nurse-Patient Communication on the Management of Chronic Diseases Among Older Adults in Borno State

Background of the Study

Effective communication between nurses and patients is essenti...

Read more
THE EFFECT OF LEVERAGE ON PROFITABILITY OF QUOTED PHARMACEUTICAL FIRMS IN NIGERIA

EXCERPT FROM THE STUDY

Adesina, Nwidobie and Adesin (2015) suggested that management of quoted banks in Nigeria consiste...

Read more
A Study on the Influence of Political Affiliation on Media Editorial Policies in Sokoto North Local Government Area, Sokoto State

Chapter One: Introduction

1.1 Background of the Study
Political affiliation significantly influe...

Read more
The Role of Public Relations in Encouraging Renewable Energy Adoption: A Study of Jalingo LGA, Taraba State

Chapter One: Introduction

1.1 Background of the Study

Share this page with your friends




whatsapp