Tax Awareness, Regulatory Complexity and Tax Compliance behaviour among SMES in Oyo States
Author
Azeez Tajudeen Akindele, Olufemi Akinloye Oyedare
Abstract
Tax compliance behaviour emphasizes the dynamic processes through which taxpayers respond to tax laws, administrative procedures, and enforcement strategies. While extant literatures focused on the effect of tax education on compliance in other developing nations, this study examined the influence of tax awareness and tax regulatory complexity on tax compliance behaviour among SMEs in Ibadan. The study was anchored on Deterrence Theory and the Slippery Slope Framework and adopted a descriptive survey research design. Drawing from a population of 7,987 registered SMEs (SMEDAN/NBS, 2022), primary data were collected through questionnaires administered across five Ibadan Local Government Areas using multistage sampling. A total of 396 valid responses were analyzed using descriptive statistics, and multiple regression analysis. Tax awareness significantly and positively influenced compliance (t(394) = −11.08, p < .05), with high-awareness SMEs demonstrating markedly higher compliance. Regulatory complexity showed no significant bivariate effect (t(394) = −0.05, p > .05) but emerged as a significant negative predictor in the joint model (β = −0.590, p < .001). The study concluded that tax awareness is the most powerful determinant of SME tax compliance behaviour in Ibadan, operating directly and in interaction with regulatory complexity. Regulatory complexity exerts a significant negative effect in the multivariate model, confirming that Nigeria's fragmented tax administration imposes real compliance barriers. It was recommended that the Nigeria Revenue Service (NRS) and the Oyo State Internal Revenue Service (OYIRS) institutionalize taxpayer education programmes targeting SME clusters, prioritize regulatory simplification and harmonization across tax tiers to reduce compliance costs, and strengthen fairness-enhancing practices including transparent assessment procedures and accountable revenue utilization to build SME trust and improve voluntary compliance across Oyo State.
Keywords
Fiscal Policy, Institutional Trust, Revenue Mobilization, Tax Administration, Voluntary Compliance,
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