Taxation Practices and the Survival Small and Medium-Sized Enterprises (SMES)
1Chukwunwike, O. David firstname.lastname@example.org
1Ekete, Linus I.
1Okeke, Stella Ehis
1 Department of Accountancy, University of Nigeria, Enugu Campus
Small and Medium-sized Enterprises serve as key economic stimulators in both developing and developed economies of the world. However, the growth and expansion of these businesses has been hampered by several factors, including high energy cost. This study aimed to examine the effect of taxation practices on the growth of Small and Medium-sized Enterprises (SMEs) with specific focus on whether tax practices have significant implication on profitability, investment decisions, and cash flow of small businesses in Enugu metropolis. The survey research design was adopted for the study. Hypotheses were tested using chi-square and regression analysis. Results from the chi-square and regression analysis indicated that tax practices significantly affects the profitability and investment decisions of SMEs. On the effect of taxation on cash flow of SMEs, chi-square test showed non-significant effect of taxation on cash flow while the regression analysis revealed a significant relationship between taxation and cash flow of SMEs. This contradiction can be attributed to bias exhibited by some of the respondents in answering some questions asked during the survey. The study therefore, recommended that government should improve on the tax incentives already provided, improve on infrastructure, and implement tax policies based on ability to pay and eschew multiplicity of payment by SME owners as these will eventually encourage growth and expansion of SMEs and the economy at large.
Keywords: Taxation, Growth, Tax policies, SMEs, Tax practice, Enugu.