Title: CAPITAL ALLOWANCE INCENTIVES, TAX HOLIDAY INCENTIVES ANDCONTINUITY OF SMALL AND MEDIUM SCALE ENTERPRISE IN NIGERIA

Authors: Matthew Kunle OLAWALE, Iheanyi Odinakachi ANYAHARA and Godwin Emmanuel OYEDOKUN

Abstract: This study examines capital allowance incentives and tax holiday incentives on the continuity of Small and Medium Scale Enterprises (SMEs) in Nigeria. The population consists of the total number of registered Small and Medium Scale Enterprise Owners within selected four major commercial states (Lagos, Kano and Port-Harcourt and Abuja) in Nigeria with estimated number of twenty-five thousand, six hundred and sixty-one. The study аdоpted a descriptive survey research design. The study relied on primary data which was gathered through structured questionnaires containing closed ended questions as well as Statistical Package for Social Sciences (SPSS) to analyze the data. Findings revealed that capital allowance deductions enable SMEs to strategically lower their tax burden that results in expansionary cash flow and application of tax holiday benefits has a meaningful positive contribution to SME survival in Nigeria and tax holidays, offering temporary exemptions from taxes, can provide crucial breathing room during a business’s early stages or periods of expansion. However, the effectiveness of these incentives depends on factors such as the design of the programs, accessibility for SMEs, and the overall business environment in Nigeria. This study concludes that efficient tax policy positively enhances the continuity of SMEs as it minimized the compliance burden, improved accountability, and built confidence of the SMEs in the tax authorities. The study therefore recommended that policy recommendations can be made to optimize the design and implementation of capital allowance and tax holiday incentives to better support SME continuity and contribute to sustainable economic growth in Nigeria.

Keywords: Business continuity, Business environment, Capital allowance, SMEs, Tax holiday, Tax incentives.

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