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ARE TAX INCENTIVES STIMULATING SMEs’ COMPETITIVENESS IN NIGERIA? A CRITICAL EXAMINATION

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Abstract

A major objective of tax incentives is to stimulate the competitiveness of small and medium-scale enterprises (SMEs) to contribute meaningfully to economic development. However, it appears this objective has not been achieved as many SMEs in Nigeria struggle for their survival. Are the tax incentives given by the government actually meeting the objective? This study therefore investigated the extent of utilisation of various tax incentives by SMEs in Nigeria and examined the impact of these incentives on the competitiveness of SMEs. Data were collected through the administration of structured questionnaire to purposively selected respondents who are knowledgeable in tax incentives. Data collected were subjected to psychometric tests, and were analysed using Pearson correlation analysis and OLS multiple linear regression technique. The results showed that SMEs in Nigeria enjoy tax incentives such as capital allowance, reinvestment allowance, investment tax credit, reduced company income tax, tax holiday, and free trade zones and export incentives to a moderate extent. The study also revealed that tax incentives have fairly stimulated the competitiveness of SMEs in the areas of employment creation, investment opportunities, and production capability amongst others.

Suggested Citation

  • Unam Monday, James, 2019. "ARE TAX INCENTIVES STIMULATING SMEs’ COMPETITIVENESS IN NIGERIA? A CRITICAL EXAMINATION," Journal of Taxation and Economic Development, Chartered Institute of Taxation of Nigeria, vol. 18(2), pages 72-91, September.
    • Handle: RePEc:ris:jotaed:0015
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