Digital Tax Policies and The Tax Gap in The Informal Sector in ‎Southwest, Nigeria

  • Authors

    • Gbenga Olanrewaju Akinboboye Department of Accounting, College of Social and Management Sciences,‎ Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria https://orcid.org/0009-0003-3937-7235
    • Muyiwa Emmanuel Dagunduro Department of Accounting, College of Social and Management Sciences,‎ Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria
    • Muideen Adeseye Awodiran Department of Accounting, College of Social and Management Sciences,‎ Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria
    • Taiwo Hossein Babalola Department of Accounting, College of Social and Management Sciences,‎ Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria
    • Oluwatayo Olugbenga Ifelola Department of Accounting, College of Social and Management Sciences,‎ Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria
    • Oghenetanure Jane-Marie Akpotu Department of Accounting, College of Social and Management Sciences,‎ Afe Babalola University, Ado-Ekiti, Ekiti State, Nigeria
    https://doi.org/10.14419/1s75af60

    Received date: July 22, 2025

    Accepted date: October 7, 2025

    Published date: November 9, 2025

  • Digital Tax Policies; Tax Promax; Electronic Tax System; Digital Tax Reporting; Tax Gap

  • Abstract

    Globally, the tax gap remains a pressing challenge for many economies, particularly within the ‎informal sector, where compliance levels are traditionally low and monitoring is difficult. ‎Considering this, this study examined the effect of digital tax policies on the tax gap within the ‎informal sector of Southwest Nigeria, focusing on three key constructs: digital tax reporting, ‎electronic tax systems, and Tax ProMax. The study adopted a survey research design targeting ‎‎3,145 Federal Inland Revenue Service (FIRS) tax officers across the South-West states of ‎Nigeria and 200 micro and small business operators in Lagos, given their central role in tax ‎administration and informal sector compliance. A sample of 342 tax officers was proportionately ‎selected across states using the Krejcie and Morgan formula, while 200 questionnaires were ‎purposively distributed to informal operators, yielding 146 valid responses and bringing the total ‎sample to 488. Data were collected through a structured questionnaire. Using partial least squares ‎structural equation modelling, the findings revealed that both digital tax reporting and Tax ‎ProMax had significant positive effects on reducing the tax gap, while the electronic tax system ‎had a positive but insignificant impact. The results showed that technologies that enhance ‎monitoring, enforcement, and transparency are more effective in addressing compliance issues ‎within the informal sector. The study concluded that digital tax policies are critical instruments ‎for addressing the persistent tax gap in Nigeria’s informal sector. Based on these findings, this ‎study recommends that policymakers should strengthen the adoption of digital tax reporting ‎platforms by enhancing accessibility, reliability, and security‎.

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    Akinboboye , G. O. ., Dagunduro, M. E. ., Awodiran, M. A. ., Babalola, T. H. ., Ifelola, O. O. ., & Akpotu, O. . J.-M. . (2025). Digital Tax Policies and The Tax Gap in The Informal Sector in ‎Southwest, Nigeria. International Journal of Accounting and Economics Studies, 12(7), 318-331. https://doi.org/10.14419/1s75af60