The effect of tax on the performance of small and medium enterprises in Ugandan rural areas

Abstract

The study was carried out to determine the effect of tax on the performance of small and medium enterprises (SMEs). The objectives included to establish the perception between public service delivery to their contribution to the tax revenue, to establish policies for improving tax policy and practices for small and medium enterprises The study was carried out involving a collection of both quantitative and qualitative data Sources. Primary data was collected using questionnaires and secondary data from, text books and journals. The findings revealed that taxation as a policy negatively affects a number of SME’s in that public service sector is rotting in contrast to their tax payments which means SMEs don’t get value for their money; profits which would have been ploughed back into the business are eroded away by tax. Recommendations include; sensitization of income tax payers by URA officers in form of tax education should be done regularly. URA should also train their staff about tax assessment and collection methods as well as how to handle tax payers and small scale beginners regardless of the size and level of gross annual turnover should be exempted from income tax deposits