Tax Literacy and Tax Yield among Micro, Small, And Medium Enterprises (MSMEs) in Ondo State, Nigeria

Ayokunle Simon Adebayo, Olusola Esther Igbekoyi and Elijah Oladeji Oladutire
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Ayokunle Simon Adebayo: Department of Accounting, Adekunle Ajasin University, Akungba-Akoko, Ondo State, Nigeria.
Olusola Esther Igbekoyi: Department of Accounting, Adekunle Ajasin University, Akungba-Akoko, Ondo State, Nigeria.
Elijah Oladeji Oladutire: Department of Accounting, Adekunle Ajasin University, Akungba-Akoko, Ondo State, Nigeria.

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Abstract: The Micro, Small, and Medium-Scale Enterprises (MSMEs) constitute a larger part of Nigeria's economy, yet they are faced with the challenge of limited knowledge of tax administration, which results in their inability to effectively manage and comply with taxes. This study therefore investigated the effect of tax literacy on tax yield among Micro, Small, and Medium-Scale Enterprises (MSMEs) in Ondo State, Nigeria. The study employed a survey research design in sourcing data primarily through the administration of a well-structured questionnaire. The population of the study consists of 7,899 registered MSMEs in Ondo State. A sample size of 381 MSMEs was drawn from the population, using the Taro Yamane (1967) formula. Reliability and validity tests were carried out on the questionnaire drafted using the Cronbach's Alpha. Descriptive statistics was used in analysing the demographic information of respondent while Structural Equation Modelling (SEM) was used explicitly to analyse the collected data and test the hypothesis formulated. Findings indicated that tax management skill, tax planning strategies, and tax timing knowledge have a positive and significant effect on tax yield showing a coefficient of 0.169; t-statistics of 2.843and P-value of 0.005 for (TXMS) and a coefficient of 0.273; t-statistics of 3.885 and P-value of 0.000 for (TXTK) respectively. The study concluded that enhancing tax literacy among MSMEs will aid their capacity to effectively plan and manage tax, as well as improve timely filling and payment of tax in Ondo State, Nigeria. This study, therefore, recommends that the tax authority should develop a comprehensive tax capacity-building framework that will address MSMEs' challenge of strategic planning of tax as well as timely filling and remittance of tax to improve tax yield.

Date: 2026-03-18
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Published in Asian Journal of Economics, Finance and Management , 2026, 8 (1), pp.250-265

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05558828

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