ASSESSING THE RELATIONSHIP BETWEEN TAX AUDITS AND MSME TAX COMPLIANCE IN NIGERIA

This study investigates the effect of tax audits on the compliance behavior of Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. Using a sample of 500 MSMEs, data were analyzed employing regression techniques through the Statistical Package for Social Sciences (SPSS). The findings reveal that tax audits significantly enhance tax compliance among MSMEs. Specifically, intentional tax fraud investigations and enterprise tax return verifications were found to have a significant positive impact on compliance levels. However, the study also highlights that many local government revenue collectors and their agents lack adequate technical expertise to effectively conduct tax audits, particularly when the integrity of businesses’ accounting records is questionable. The study recommends that the government implement comprehensive training and retraining programs for tax authority personnel and agents to strengthen their capacity in revenue collection and audit procedures. By enhancing the technical competence of tax officials, the tax base can be expanded, and voluntary compliance among MSMEs improved, contributing to greater fiscal stability and effective revenue mobilization in Nigeria.