Impact Of Multiple Taxation On Small And Medium Scale Businesses

Impact Of Multiple Taxation On Small And Medium Scale Businesses

Chapter One

Preface

Nigeria happens to be one of those countries that ask to make a cultivated nation with a strong and sound frugality. Demonstration of such a desire is seen in Tax payment, but utmost citizens see it as government’s means of exploitation. duty is a donation assessed by the Government on income earners, importers, companies, investors, exporters,etc.( Holban, 2007).

profit generated from duty happens to be a major source ofGovernment profit in Nigeria, which makes it an important tool in the development of her frugality. Every nation’s duty policy and inversely their systems are related, greatly, with businesses and gambles in that country. A successful and finance-healthy business environmentis the result of aneconomy that enacts favorable duty programs. As businesses do well, the frugality flourishes as well. This is because there’s no faster way of quickening effects in an frugality other than the help of associations that move goods, plutocrat services, and investments from those with fat to those with deficiency; those with marketable ideas affair to those who need these ideas and products. This shows that, businesses and duty programs are inter dependent. Each ca n’t do without the other.

duty System in Nigerian in recent times, has experienced notable changes. colorful studies and inquiries by duty experts have helped as Tax laws are being reviewed with the end of replacing non applicable vittles while simplifying the main bones . The current Nigerian lawplaced the responsibility on the shoulders of the 3 categories of Government to apply taxation with each having its governance easily spelt out in the levies and impositions( approved list for Collection).

Small businesses as generally honored as motorists of profitable success are a crucial component in the “ ecology of businesses ” in a healthy system. They produce jobs; induce deals which are sources of duty and financial profit for government. The significance of small business as a creator of jobs can not be ignored, especially for those with low chops. Small, medium and micro-enterprises( “ SMMEs ”) as they’re generally categorizedemploy68.2 of the pool in the private sector while contributing to 60 of the country’s GDP. SMBs employ further than 60 of the total pool in sectors like the husbandry, retail, construction etc. This has over the times, seen to the growth in employment by SMBs and has quadrupled their donation to the nation’s GDP. Indeedthis sector of the frugality, hold a hugepotential for job creation!

One of the constraints to the expansion of businesses both in Nigeria and beyond are regulations else known as red videotapes in duty. As reported by International exploration, duty nonsupervisory compliance costs are a significant portion of the total nonsupervisory cost. There are several other patterns that haveemerged from the colorful original and transnational studies carried out, among the most imperative being that duty compliance costs comprises a much larger proportion of total compliance costs for lower gambles.

likewise, colorful studieshave suggested that for any approach to help small business to be effective it’ll bear both policy and administration model adaptations. The time 2005 saw the launch of a process of structural change, intended to make a positive duty compliance climate for income earners and businesses in Nigeria.

Statement Of The Problem

Small and Medium Businesses( SMBs) form the core of maturity of the world’seconomies.Federal Office of Statistics carried out a study that shows thatsmall and medium enterprises make up 98 of the frugality in Nigeria; still, the mortality rate of these small businesses has been on the increase( Arroyo, 2005). According to Small and Medium Enterprises Development Agency of NigeriaSMEDANan SMB body in Nigeria, 70 of businesses into manufacturing, merchandising and Agro grounded in Nigeria die off before their 5thanniversary.Tax related issues like multiple taxations and enormous duty burdens similar as double duty assessment on the profit of the business and income of the proprietor are among the factors responsible for these early business close- ups. Reason has been that small and medium enterprises are generally viewed and treated in the same light as large pots in numerous government programs. This is a major reversal, the ignoring of their different unique natures. It’s consummate to considerthese unique rates, while dealing with small and medium enterprises. There’s a needto consider issues on how these duty programs can be designed to encourage the growth of Small scale businesses with the most effective ways to administer them.

numerous businesses aren’t favored by the being duty programs thereby making Tax a burden and a major problem for launch- Ups in Nigeria. Like we saw before, some businesses are formerly at the verge of collapse, while to insure their businesses still live, maturity are still floundering to meet up with high duty rates Bateman( 2007). A recent check has shown that 91 of business possessors admit that levies have been huge constraints on their businesses, as it doesn’t allow new businesses to cover up original cost because levies are high.

An explicatory illustration of a medium scale business that has wind up in recent time precisely time 2014 in Uyo civic was Agatha Garden and Hotel Ltd( Source) Letter of Cessation of business written to Debt Management and Enforcement office( DM&EO) of the Federal Inland Revenue Service( FIRS) dated 23rd October, 2014 Referenced FIRS/ SS RHQ/ DMO/ 113

The content of the letter accompanied by other applicable reports not made available to me as requested for the purpose of this exploration work state that operation of the hostel decided to cease business conditioning because the cost of running the business was further than the profit generated coupled with the series of uncollectable duty inspection arrears raised from 2007 to 2013 when the company was handling some major contract work with Mobile unlimited.

According to the Federal Inland profit service( FIRS) inspection report

The income generated by the hostel was taxable and must be paid grounded on the inspection findings

still, failure will attract legal action against the hostel operation which was formerly been introduced by the Legal Department of the Service through Debt Management and Enforcement office

Objects Of The Study

The main ideal of the study is to examine the impact of taxation on small and medium scale businesses in Uyo civic. Specific objects of the study are

To examine the relationship between multiple taxation and SMBs survival in Uyo Urban.

ToIdentify the multiple levies which the possessors and drivers of SMBs have been paying in Uyo Urban.

To trace the failure or close up of Small and medium Scale Businesses in Uyo Urban to Multiple taxation.

To find out the after effect of the business failures or close ups on the possessors, drivers, workers and the state in general.

To recommend better ways of reducing the prevalence of multiple taxation on SMBs in Uyo Urban.

Exploration Questions

In- order to guide the study and achieve the over stated exploration objects, the following questions were formulated

What relationship exists between multiple taxation and survival of small and medium scale businesses in Uyo civic?

What are the colorful forms of multiple levies which the possessors and drivers of SMBs have been paying in Uyo Urban?

How can the failure or close up of Small and medium Scale Businesses in Uyo Urban be traced to Multiple taxation?

What are the after effect of the business failures or close ups on the possessors, drivers, workers and the state in general?

What better ways can be enforced to reduce the effect of multiple taxation on SMBs in Uyo Urban?

Exploration Suppositions

1. Ho There’s no significant relationship between multiple taxation and SMBs ’ survival.

Hi There’s a relationship between multiple taxation and SMBs survival

2. Ho Multiple taxation don’t regard for business failures or close ups in Uyo Urban.

Hi Multiple taxation accounts for business failures or close ups in Uyo Urban

Significance Of The Study

This study when conducted could give a clear sapience into the colorful ways in which duty programs in Nigeria can be executed efficiently to still favor small businesses and how some taxation programs in Nigeria could be duly dived . The study could also give a clear sapience into the colorful causes of why small businesses fail in Nigeria as well as the challenges of the duty programs in Nigeria. The findings and recommendations of the experimenter would help in erecting a strong and better duty policy system in Nigeria. The goods of multiple taxation on small and medium scale businesses are outlined in- order for drastic measures to be taken to attack these challenges and meet the prospects of the general public so that profit from duty policy to the government can be increased.

Compass Of The Study

This exploration focuses substantially on the impact of taxation on SMBs in Uyo Urban. The study only firebugs on the colorful levies collected from SMBs, challenges duty programs in Nigeria and how it can affect tone employed business men and women, dealers, and other forms of sole procurement businesses.

Limitation Of The Study

The only limitation faced by the experimenter in the course of carrying out this study was the detention in getting data from the colorful repliers. utmost repliers were reticent in completing questionnaires administered to them due to their busy schedules and nature of their work. The experimenter set up it delicate to collect responses from the colorful repliers, and this nearly hampered the success of this study.

Association Of The Study

Chapter one of this study includes the general preface, background information about the study, statement of the problem, objects of the study, exploration questions, compass of the study, significance of the study, and the limitation of the study.

Chapter two reviews all applicable literatures relating to the study as well as the experimenter’s views concerning former studies on the effect of multiple taxation on Small and Medium Scale Businesses.

Chapter three includes the methodology applied in collecting and analysing data, population description, study point, and limitations.

Chapter four presents the results of the study as well as data analysed, and the interpretation of the anatomized data.

Chapter five includes a summary of the study, conclusion and recommendations grounded on the findings from the study.

literal Background of Uyo Urban and multiple Taxation System

Uyo is a megacity in south- south Nigeria and is the capital of Akwa Ibom State, a major oil painting producing state of Nigeria. The megacity came the capital of Akwa Ibom State on September 23, 1987 following the creation of Akwa Ibom State from erstwhileCross River State. The University of Uyo resides in this megacity. The population of Uyo, according to the 2006 Nigerian Census which comprises Uyo and Itu, is 436,606. while the civic area, including Uruan, is 554,906.

The megacity can be penetrated by road via the A342 trace, as well as Abak Road, Nwaniba Road, Itu Road, and Aka Road. near airfields include the Uyo Airport, also known as the Akwa Ibom International Airport.

Uyo is a fast- growing megacity, as the megacity has witnessed massive infrastructural growth in the once nine times. It has an ferocious network of disunited roadways, similar as the IBB Way, AtikuAbubakar Avenue, UdoUdoma Avenue, NsikakEduok Avenue, and EdetAkpan Avenue which is an eight- lane superhighway and presently the widest road in the Uyo megalopolis.( citation demanded) presently, flyoversare being constructed to ease business. Three flyovers have formerly been completed at the Itam axis of the civic area which is under Itujurisdiction. Plans are in process for further flyovers as well as ongoing dualisation of Aka road, ongoing construction of Ring Road 3 with flyovers( a portion of it’ll be ten lanes) and the dualisation of WellingtionBassey Way

Thisunprecedentedinfrastructural development has led to increase in the number of new businesses thereby also rephrasing to increase government internally generated profit through Taxation.

still, the process of generating profit by the Akwa Ibom State Internal Revenue Service over time has been grueling reason been that small and medium business possessors are complaining and in utmost case resistant to TaxAuthority because of multiple levies.

Notable among the multiple duty assessed in places similar as URUA AKPANAMDEM( Akpanamdem Market) include general request duty, Environmental sanitation freights, security freights and pavilion/ space freights

Trycircle drivers( keke) in February 2015 offered a peaceful demonstration against what they name multiple duty been collected by the state duty force an chapter of the state ministry of transport and terrain.

description OF TERMS

duty According to Ariyo( 2005), atax is a fiscal charge or other tax assessed upon a taxpayer( an individual or legal reality) by a state or the functional fellow of a state to fund colorful public expenditures.

SMB Small and Medium Scale Businesses

Multiple Taxation When a single quantum of plutocrat is tested further than formerly, frequently by two or further different authorities in a way that may be illegal or illegal( Bateman, 2007).

REFERENCES

Ariyo,D.( 2005) Small enterprises are the Backbone of the Nigerian Frugality. recaptured October

22nd, 2010, from http//www.africaeconomicanalysis.org/articles/gen/smallhtm.html.

Bateman,A.( 2007) Globalization of product and the Competitiveness of Small and

Mediumsized Enterprises in Asia and the Pacific Trends and Prospects. Publication of United Nations Economic and Social Commission for Asia and the Pacific( ESCAP), Studies in Trade and Investment Series chapter 1, 1- 31

Holban,O.I.( 2007). The Taxation of Small and Medium- Sized Enterprises- a Hindering

Factor impacting the European EconomicGrowth.Doctoral discussion, AlexandruIoanCuza University of Iasi and Academy of husbandry Studies from Bucharest Romania.