THE EFFECT OF TAXATION ON THE PROFITABILITY OF SMALL – SCALE ENTERPRISE IN NIGERIA

This study investigated the impact of tax policies on the sustainability of small- scale businesses in Nigeria, using a sample of 34 respondents. Data were collected via structured questionnaires and analyzed using Likert scale mean statistics and regression analysis. The study focused on three major areas: tax compliance 8 levels, the influence of tax policies on business sustainability, and policy recommendations. Findings showed that small business owners have a moderate level of tax compliance, largely driven by the fear of penalties rather than adequate tax knowledge or training. The mean score for tax compliance-related questions ranged from 3.35 to 4.29. Regression analysis showed a statistically significant relationship between tax knowledge and compliance (p = 0.011). In assessing the impact of tax policies on business sustainability, most respondents agreed that excessive taxes could threaten their business (mean = 4.47), while incentives could foster growth (mean = 4.32). The regression result confirmed a significant relationship between favorable tax policies and business sustainability (p = 0.017). Lastly, policy recommendation statements scored the highest mean values (4.18–4.59), indicating consensus on the need for reforms. Regression analysis showed a significant influence of simplified policies on improved tax compliance (p = 0.021). The study concludes that while small-scale businesses strive to comply with tax obligations, systemic barriers such as lack of education, complex documentation, and lack of fairness in policy design hinder their sustainability. It recommends targeted reforms to build a more inclusive and supportive tax environment