SME’s Contribution to The Economy; Hindered by High Taxes

TaxThe Small and Medium Enterprises has been burdened with high taxes and they contribute less to the improvement in the Nigeria’s economy. SME’s which are suppose to be of great help to the economy have not really been able to take its place in the economy.

This challenge was made known at the global body for professional accountants offering the Chartered Certified qualification, Accountant Association of Chartered Certified Accountants (ACCA) during a workshop for small businesses.

Turner said as the big corporate companies have become victims of the global financial crisis, SMes have come through, and thrived, in the face of adversity.

“But it has not all been plainsailing for you, due mainly to the tax challenges you face in this country as small and medium sized businesses,” he said.

“The taxation of investing in SMEs here, as well as the actual day-to-day running of things, is making it more difficult for you to help the economy. There are reasons for the tax -a regulation, as I am sure you are aware of taxation of small businesses has been implemented to regulate and ensure reputability in these testing times.

“The costs of these taxes are, of course, an extra strain on you, particularly when you first start up. This is where accountants come into play, as I will tell you about a bit later on,” he said.

Turner said on the other hand, there had been discount initiatives for incentives to potential investors such as tax holidays and capital allowances which reduced annual taxes by up to two-thirds in various industries, stressing those non-petroleum businesses also had a low corporation tax rate of 30 per cent.

While noting that it is not just tax and competition which create challenges for SMEs, Tuner said they also faced the cautiousness of the banks to lend money, as a direct result of the financial crisis.

“Access to finance is a big issue, especially for start-up businesses, because banks are now too afraid to take the “risk” of lending money to them, because of the uncertain future,” he said.

Stating that a recent report by at the ACCA Global Forum for SMEs, urged governments to take greater policy action to help SMEs access finance, Turner said similarly, “A report we published last year called High-growth SMEs: understanding the leaders of recovery concludes that the success of SMEs comes, in part, from hiring an accountant to advise them on their financial matters.”

This is really an eye-opener for all SME’s and in particular the government who should help the SME’s be a part of the improvement in the Nigeria’s economy.

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