The business environment and tax compliance among small and medium enterprises in Uganda. Case study: Mbuya parish in Nakawa division of Kampala district

Abstract

The study focused on the Business Environment and the level of Tax Compliance among SMEs in Mbuya parish of Nakawa division. A cross sectional survey design that was quantitative and qualitative in nature was used on owners and employees of SMEs. A purpose built self-administered questionnaire that comprised of both close ended and open ended questions was used to collect data and was administered on 76 respondents who were sampled from a population of 80 SMEs. Collected data was crosschecked, coded and summarized into frequencies, percentages, pie charts, means, and standard deviations. It was analyzed using the statistical package for social scientist (SPSS) Pearson’s correlation coefficient (r) was used to test for the significance of the research questions. The study revealed that there was a significant relationship between the Ugandan Business Environment and the level of Tax Compliance among SMEs. The key study reccomendations were that state should reshuffle the main URA body and employ competent and ethical tax officials, URA should also put up more stringent rules on bribery, corruption and non-compliance and Small and Medium Enterprises should be levied lower amounts of taxes so that they will have enough funds for other activities that will lead to business growth. The owners and managers of SMEs also expressed challenges that they usually face during registration of their businesses as well as complying to taxes and gave their views on how the government and other stakeholders can mitigate the challenges associated with the business environment and tax compliance.