THE IMPACT OF TAX POLICIES ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN NIGERIA (A CASE STUDY OF OYO STATE)

ABSTRACT This study examines the impact of tax policies on the performance of Small and Medium Enterprises (SMEs) in Nigeria. SMEs play a vital role in economic development by generating employment, fostering innovation, and contributing to GDP. However, their growth and sustainability are often constrained by the complexity and burden of tax regulations. This study investigates how various tax components-including tax rates, compliance requirements, and government tax incentives-affect SME profitability, expansion, and survival. A descriptive research design was employed, utilizing primary data collected through structured questionnaires administered to SME operators across selected sectors in Oyo State. The sampling technique used was stratified random sampling to ensure representation across various sectors. The collected data were analyzed using descriptive statistics and chi square to determine the strength and direction of the relationship between tax variables and SME performance indicators. The result revealed that the current tax policies in the state has no significant relationship with the growth and performance of SMEs in the state: and that it was also revealed that high cost and complexity in tax system has a negative influence on SMEs profitability. Furthermore, it was revealed that tax policies in Oyo State has a direct and significant impact on SMEs investment decision. This study recommends the simplification of tax processes, increased tax education, and the implementation of SME-friendly tax reforms to foster a more enabling environment for business growth.