Tax Compliance Cost and Firm Performance Among Service Sector Businesses in Abuja

This study examines the relationship between tax compliance costs and firm performance in the service sector in Abuja, Federal Capital Territory, North Central Nigeria. Compliance costs, encompassing time spent on record-keeping, fees paid to tax consultants, and costs of responding to audit inquiries, represent a hidden tax burden that may disproportionately affect smaller service-sector firms. As Abuja's economy becomes increasingly service-driven, understanding how these costs affect business outcomes is important for policy. A descriptive survey design is employed, with primary data collected from 150 service businesses spanning legal, consulting, hospitality, and ICT sub-sectors in Abuja. The questionnaire measures monthly and annual compliance cost estimates, firm size, annual turnover, and self-reported performance metrics. Descriptive statistics and Pearson correlation are the main analytical tools. The study expects to find a significant inverse relationship between compliance costs as a proportion of turnover and firm performance indicators, particularly for sole proprietorships and micro-enterprises. It also anticipates that the availability of professional tax advisory support significantly reduces compliance time and errors. Recommendations include providing free FIRS-sponsored compliance clinics for small service businesses, simplifying tax return forms for non-complex service businesses, and deploying AI-assisted compliance tools that reduce the need for external consultants. Keywords: tax compliance cost, firm performance, service sector, Abuja, SMEs.