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Abstract

Tax policy is one of the factors that affect the performance of SMEs. Owing to data limitations, the study selected only 352 SMEs from the 2014 World Bank’s Enterprise Survey and relied on multiple regression analysis so as to determine the impact of fiscal policy (taxation) on the performance of SME’s and to also identify other factors affecting the operation of SME’s in Nigeria. In order to estimate the multiple regression models, the study employed the Ordinary Least Square method (OLS), Logit and Probit approaches for robustness. Overall, findings showed that legal/ownership status, ease to access of electricity, ease of access to finance, capacity utilization and theft are significant determinants of SME’s growth in Nigeria, while registration status, tax administration, extent of competition are insignificant determinants. Nonetheless, the current tax administration imposes a huge burden on the sales performance of SMEs in Nigeria. It is therefore suggested that the Nigerian government should adopt less stringent tax administration measures that would be positive for SMEs’ growth and, at the same time, guarantee improved tax compliance by the SME operators.