EFFECT OF PRESUMPTIVE INCOME TAX ON MICRO, SMALL AND MEDIUM ENTERPRISES (MSMES) TAX COMPLIANCE IN BAUCHI STATE, NIGERIA

Bauchi State, Nigeria, is faced with the problem of low internally generated revenue. The study, therefore, aimed to investigate the effect of presumptive tax on tax compliance of micro, small and medium enterprises (MSMEs) in the State. The population of the study is 1,167,941, which is the number of MSMEs in Bauchi State, Nigeria. A proportional sampling selection technique was adopted, and Taro Yamane's 1967 formula was employed for the sampling size. The research design for the study is cross-sectional; therefore, a quantitative approach was adopted.Aprimary data collection method was used, andto collect the data, 400 questionnaires were administered to the participants. Out of the questionnaires administered, 282 were properly filled out and collected, and for the analysis, a regression technique was employed.The result of the study shows that presumptive tax does not have a significant effect on tax compliance of MSMEs in Bauchi State, Nigeria.The study, therefore, found that presumptive tax does not affect MSMEs’ tax compliance decisions in Bauchi, Nigeria. This implies that the businesses may choose not to grow beyond the presumptive regulation’s eligibility threshold. The government is advised to educate the MSMEs on the importance of bookkeeping to exit the presumptive regime for the standard tax system.