This study examined the effect of tax policies on Micro, Small and Medium Enterprises (MSMEs) performance in Ondo State, Nigeria. The rate at which MSMEs ceases to operate is very high owing to a number of factors among which include poor market control, stiff competition to enormous tax burdens. The study involves a survey research design with a population of 73,081 registered MSMEs in Ondo State (71,288 Micro and Small enterprises and 1,793 Medium enterprises). The researchers derived their sample size to arrive at 400 using Taro Yamane formula; and a self-administered questionnaire was used to collect data. ANOVA table report the test of significance of the overall model. It reports how the variables included jointly affect the MSMEs performance. The result shows that the examined tax policies of the government have significant relationship with the MSMEs performance in Ondo State while the model is significant at 0.05 level. Tax rate (-0.089), tax assessment (-0.159) and Value Added Tax (VAT) (-0.007) are negatively related with MSMEs performance in Ondo State but only significant statistically for tax assessment at 0.05 level. The implication is that any possible increment in tax rate, tax assessment and VAT will lead to reduction in MSMEs performance. Thus, the study concluded that an increase in tax burden will result in dwindling performance of MSMEs in Ondo State, Nigeria. The study recommended that Government should give accelerated tax refund and provision to claim back preliminary taxes paid, or set it off against future losses to improve performance, also they should ensure adequate infrastructure capable of providing support for MSMEs business to hamper their willingness to remit VAT.