Tax Audit and Revenue on Small and Medium-Scale Enterprises in Nigeria

Abiodun Samuel Ajayi, Kolawole Olalekan Adebola, Babalola Raphael Adesunloro, Adenike Omowumi Oladipo and Ajagbe Grace
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Abiodun Samuel Ajayi: Landmark University, Omu Aran, Kwara State, 251103, Nigeria
Kolawole Olalekan Adebola: Bamidele Olumilua University of Education, Ikere Nigeria
Babalola Raphael Adesunloro: Wesley University, Ondo, Ondo State, Nigeria
Adenike Omowumi Oladipo: Landmark University, Omu Aran, Kwara State, 251103, Nigeria
Ajagbe Grace: Landmark University, Omu Aran, Kwara State, 251103, Nigeria

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 6, 3514-3527

Abstract: Tax is a key way for the government to make money, which is crucial for things like roads, schools, and other public services. This study looks at how tax audits like field audits and back-duty audits impact tax revenue from Small and Medium Enterprises (SMEs) in Nigeria, with a focus on how tax compliance plays a role. While tax audits are known to help improve compliance, not much research has been done on how tax compliance fits into the relationship between audits and tax revenue for SMEs. To gather data, this research surveyed 168 people from 42 SMEs and the Federal Inland Revenue Service (FIRS) in Lagos State. A random sampling method was used, and the data were analyzed with software like SPSS and STATA. The results show that tax policies, field audits, and back-duty audits all have a positive impact on tax compliance. Field and back-duty audits are also found to significantly affect tax revenue. Interestingly, while tax policy doesn’t directly impact revenue, it does so indirectly by affecting tax compliance. The study shows that tax compliance partially mediates the link between tax audits and tax revenue, strengthening the relationship between back-duty audits and revenue while weakening the link between tax policy and revenue. The study suggests that improving tax audits can boost compliance, which is important for increasing tax revenue. Recommendations include making tax policies simpler, using more electronic tax systems, teaching taxpayers better, and tightening audit measures to reduce evasion and improve compliance.

Date: 2025
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