The Impact of Tax Policies on Entrepreneurship Development in Nigeria
Abstract
This study examines the multifaceted relationship between tax policies and entrepreneurship development in Nigeria, analyzing how fiscal instruments shape the entrepreneurial ecosystem. Through a comprehensive review of Nigeria's tax framework, this paper explores the effects of various tax policies on business formation, growth, and sustainability. The analysis reveals that while Nigeria's tax system presents opportunities for entrepreneurial growth through various incentives, significant challenges persist, including multiple taxation, complex compliance procedures, and inconsistent policy implementation. The research identifies critical areas where tax policy reforms could enhance entrepreneurial activities and contribute to economic diversification. The challenges include high compliance burden (over 368 hours annually), multiple taxes (over 48 types across levels), administrative inefficiencies, and corruption. The informal sector (over 60% of GDP) is expanded due to high formalization costs. Eight evidence-based recommendations are proposed to optimize Nigeria's tax policies for entrepreneurship development, addressing issues of tax burden, administrative efficiency, incentive structures, and policy consistency. Recommendations include consolidating taxes, a simplified presumptive tax regime for small businesses, and comprehensive digitalization.
Keywords
Tax policies
entrepreneurship development
Nigeria
fiscal policy
business environment
tax incentives
References
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