Assessment of Voluntary Tax Compliance Among Informal Economy in Nigeria
This study investigated the level and challenges of voluntary tax compliance of businesses within the informal
economy of Ifako-Ijaiye local council development area (LCDA) of Lagos state, Nigeria. The population of the study is the
entire businesses in the (LCDA) that fall within the category of the informal economy. A sample of 100 business owners
comprising of traders, artisans, shop owners and 17 tax officials were selected using convenience sampling method. The
responses were obtained through the aid of structured questionnaire. Descriptive statistics such as mean score and
frequencies were used to analyse the data. Findings showed that the level of voluntary tax compliance in the informal
economy is low and the business owners who are the expected tax payers were of the opinion that non-utilisation of tax
revenue by the government and the excessive high tax rate account for their non-voluntary compliance. In addition,
empirical evidence as provided by the tax officials had it that the nature of the businesses of the informal economy and the
unavailability of adequate records make it hard to tax the informal economy. The study therefore recommends that
government should seek to be accountable with good governance in place, and that tax laws should regulate the tax rate
applied to businesses in the informal economy.
Keywords: Taxation, Voluntary, Informal economy, Compliance, Nigeria.