Nexus Between Political Instability And Value Added Tax Compliance Among SMEs in South-East, Nigeria

Wilson-Oshilim Uduak Deborah and Igbinoba Omena Obehi
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Wilson-Oshilim Uduak Deborah: Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City, Edo State, Nigeria
Igbinoba Omena Obehi: Department of Accounting, Faculty of Management Sciences, University of Benin, Benin City, Edo State, Nigeria.

Journal of Taxation and Economic Development, 2025, vol. 24, issue 1, 1-18

Abstract: The present investigation examines the relationship between political instability and VAT compliance within Small and Medium-sized Enterprises (SMEs) in South-Eastern Region of Nigeria. Specifically, the research examines how geopolitical marginalisation, leadership opacity, and insecurity links Value Added Tax compliance. The survey adopts a descriptive survey design, utilising primary data collected from 4,044 SMEs owners through structured questionnaires. The sample size of 364 was purposively employed to represent the views of respondents in the 5 South Eastern States of Nigeria. Ordinary Least Square regression was utilised to assess the link between political instability and Value Added Tax compliance, providing statistical insights into the factors influencing tax behaviour in politically unstable environments. The findings reveal that geopolitical marginalisation, and leadership opacity has a significant positive link with Value Added Tax compliance, while insecurity exhibits a significant negative relationship with Value Added Tax compliance. The study recommends that since secured and politically stabled environment are salient in relation to VAT compliance, it should be upheld with utmost seriousness to promote tax compliance in general, so as to enhance VAT revenue to the government

Keywords: Political Instability; Leadership Opacity; Insecurity; Value Added Tax; Marginalisation (search for similar items in EconPapers)
Date: 2025
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