Information Technology Investment and Tax Compliance in Nigerian Informal Sector

Toyin Adekeye-Olosunde, Olusola Esther Igbekoyi, Oluyinka Isaiah Oluwagbade and Muideen Adeseye Awodiran
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Toyin Adekeye-Olosunde: Department of Accounting, College of Social and Management Sciences, Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria.
Olusola Esther Igbekoyi: Department of Accounting, College of Social and Management Sciences, Adekunle Ajasin University, Akungba-Akoko, Ondo State, Nigeria.
Oluyinka Isaiah Oluwagbade: Department of Accounting, College of Social and Management Sciences, Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria.
Muideen Adeseye Awodiran: Department of Accounting, College of Social and Management Sciences, Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria.

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Abstract: In an era marked by increasing globalization and heightened fiscal scrutiny, tax compliance has emerged as a critical area of concern for governments, businesses, and individuals worldwide. This study assessed the effect of information technology investment on tax compliance of Nigerian informal sector in Ekiti State. This study adopted survey research and population of the study comprised 1,440,771 registered MSMEs in Ekiti State as of 31st December 2023 (SMEDAN,2023). A sample size of 400 respondents was selected using Taro Yamane's formula. Data was collected through a well-structured questionnaire and analysed with descriptive and inferential analysis. The empirical analysis showed that electronic tax platform investment had positive and significant effect on tax compliance among the Nigerian informal sector. On the other hand, computer software investment had positive and insignificant effect on tax compliance. Finally, the study concludes that investment in digital tax platforms have contributed to diminishing tax processing time and its user-friendly nature has improved compliance of taxpayers in the informal sector of Ekiti state. Also, when considering form of capital investment that can improve tax compliance, computer software investment is not significant. Based on the study's conclusions and findings, it is recommended that business owners should not embrace investment in computer software investment for tax purpose because it is inadequate and the cost can discourage tax compliance, and taxpayers should be encouraged to improve on their computer literacy so they can easily file their taxes and submit their files with ease and convenience in order to boost their tax compliance.

Date: 2025-06-07
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Published in Asian Journal of Economics, Finance and Management , 2025, 7 (1), pp.496-516. ⟨10.56557/ajefm/2025/v7i1291⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05105069

DOI: 10.56557/ajefm/2025/v7i1291

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