Background of the Study
Taxation plays a crucial role in revenue generation for governments, facilitating infrastructural development and public services. However, for small-scale enterprises, taxation can significantly impact profitability and growth. In Nigeria, the complex tax system, including income tax, value-added tax (VAT), and other levies, often imposes a substantial burden on small businesses (Ibrahim & Sani, 2024).
Local traders in Katsina State face unique challenges due to fluctuating market conditions, limited capital, and compliance with tax regulations. While taxation contributes to state revenue, excessive or poorly implemented taxes can reduce the competitiveness and profitability of small-scale enterprises (Bello & Musa, 2023). This study examines the balance between taxation and profitability for these traders and explores strategies to optimize tax policies to support small business sustainability.
Statement of the Problem
Small-scale enterprises are essential to local economies, providing employment and supporting community development. However, high tax rates, compliance costs, and unclear regulations can erode their profitability and discourage entrepreneurial ventures. In Katsina State, many local traders report difficulties in managing tax-related expenses, which ultimately affects their operational efficiency and growth (Adebayo, 2023). This study seeks to evaluate the impact of taxation on the profitability of small-scale enterprises and recommend solutions to alleviate these challenges.
Objectives of the Study
Research Questions
Research Hypotheses
Scope and Limitations of the Study
The study focuses on local traders in Katsina State, analyzing the relationship between taxation and profitability. Limitations include potential biases in trader responses and variations in tax policies across regions.
Definitions of Terms
ABSTRACT
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