Taxation and Family Business Ventures in Nigeria: Implications on Business Growth and Development

The interaction of taxation policies and family business management in Nigeria creates a challenging scenario that partly determines the course of business expansion and economic development. This work discusses the various effects of Nigeria's tax regime on family-owned businesses being a major source of business structure in Nigeria's economy. The study demonstrates that a cascade of multiple taxation at federal, state and local levels of government significantly hurts family businesses, typically results in lower capital reinvestment and expansion capacity. In addition, the complexity of tax compliance processes, together with a lack of knowledge of tax laws among family business operators, leads to operational costs increase and compliance expenses. The analysis further finds that activities of the informal sector, as typical in family businesses, are often the product of a perceived excessive taxation, resulting in revenue leakage for the government and lack of the formal financial access to informal businesses. Nevertheless, research shows that family businesses which always keep tax in balance are more trustful with financial institutions and also enjoy better growth capital credit. This study indicates that by simplifying the tax system, raising tax awareness, and providing fiscal incentives for family enterprises, the economic contribution of these businesses to Nigeria's national development could concomitantly be greatly increased and fiscal sustainability of the government could be maintained.