Abstract:

 In this paper, we assess SMEs’ tax compliance in Nigeria from the perspective of improving public goods and services. We utilised the Nigerian Economic Summit Group (NESG) 2018 Firms Survey Dataset on taxpayers’ perception and attitudes and estimated the model of this research using the Generalised ordered logistic regression analysis. This methodology was used to relax the assumption of equal odds for falling into either of the categories of tax compliance as the explanatory variables increase. This study found a positive relationship between improved public goods and services and SMEs tax compliance in Nigeria. However, it was revealed that a small increase in the improvement of public goods has a greater likelihood of moving SMEs to becoming low tax compliant than being tax compliant. We also found that the public goods with the highest likelihood of improving SMEs tax compliance in Nigeria are public transport, security, and law courts. Furthermore, the findings also revealed a significant positive relationship between SMEs’ tax compliance in Nigeria and tax knowledge, tax penalty, and trust in the government. The paper recommends that policymakers in Nigeria should revisit tax policies geared at improving SMEs tax compliance and should properly combine economic and psychological factors based on the extent to which they move tax non-compliant SMEs to becoming tax compliant.